British Pound (GBP) Latest: GBP/USD Continues to Test Upside pre-FOMC
GBP price, news and analysis:
- GBP/USD is again challenging resistance at the 200-day moving average despite being technically overbought.
- If a break higher follows Wednesday’s monetary policy announcement by the Federal Reserve, a climb to 1.30 and then the March highs could follow.
GBP/USD strength persists
GBP/USD is continuing to press ahead, attempting to break decisively above the 200-day moving average that stands currently at 1.2733. In early London business Wednesday it has already hit a high at 1.2786 and if it stays around current levels by the close of play it could head to 1.30 or even the March 9 high at 1.32.
There is, however, one warning sign: the 14-day relative strength index, around 75, is now well above the 70 level that suggests the pair has been overbought.
GBP/USD Price Chart, Daily Timeframe (March 3 – June 10, 2020)
Chart by IG (You can click on it for a larger image)
FOMC meeting in focus
The Pound’s underlying strength is also clear from a move lower in EUR/GBP Wednesday. However, the future of USD, EUR and GBP will likely be determined by the monetary policy announcement by the US rate-setting Federal Open Market Committee, due at 1800 GMT.
The Fed is not expected to move its Fed funds target rate so attention will focus instead on its economic projections and any hints that policy could be tightened following last week’s unexpected news of a fall in the US jobless rate in May.
There have also been reports that the FOMC is thinking about the introduction of “yield curve control”, a program designed to ensure that some long-term interest rates do not rise sharply.
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--- Written by Martin Essex, Analyst and Editor
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.