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PAIR

GBP/USD Pair Finds Support at 1.1300 Ahead of FOMC.

After touching its lowest level since 1985 earlier on Wednesday, the GBP/USD pair has recovered a few pips since then. A retreat throughout the trading session in the rates on US bonds puts a ceiling on advances for the USD and provides support for the pair. A bullish conviction is missing from the attempted rebound, which comes ahead of the highly anticipated FOMC announcement.

The British pound to United States dollar currency pair finds some support close to the 1.1300 level and recovers a few pips after touching its lowest level since 1985 earlier on Wednesday. On the other hand, the pair trades in the red for the second day in a row and is presently trading slightly below the middle of the 1.1300s, reflecting a loss of around 0.30% for the day.

Various variables help the US dollar to achieve significant follow-through impetus, which, in turn, puts negative pressure on the GBP/USD pair. The dollar continues to get support from investors’ expectations that the Federal Reserve would announce another massive rate hike of 75 basis points after a two-day policy meeting on Wednesday. In addition, the possibility of a further escalation in the conflict between Russia and Ukraine provides additional support for the safe-haven value of the US dollar.

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The most recent turn of events was when Russian President Vladimir Putin declared a partial mobilization of the Russian military. This occurs when worries of a recession are mounting, and as a result, investors’ desire for riskier assets is tempered. This can be seen in the overall cautious atmosphere surrounding equities markets. The dismal forecast for the economy of the United Kingdom puts more downward pressure on the value of the British pound. To a greater degree, this casts doubt on the likelihood of the Bank of England increasing its benchmark interest rate by 50 basis points.

On the other hand, the anti-risk flow causes a little correction in the rates on US Treasury bonds, which, in turn, prevents USD bulls from making new bets. In addition, the United Kingdom has announced plans to support companies by introducing a package that would control the cost of energy and gas. The confluence of variables helps lessen the negative pressure surrounding the GBP/USD pair; nevertheless, any natural recovery still seems elusive as the attention continues to stay on the major central bank even concerns.

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Later during today’s US session, the Federal Reserve of the United States is expected to announce its policy decision. Further guidance for investors will come from the most recent economic estimates, the so-called dot plot, and statements made by Federal Reserve Chair Jerome Powell during the press conference after the meeting. After this, on Thursday, there will be a meeting of the Bank of England, which will play a crucial role in influencing sterling and assist define the next leg of a directional move for the GBP/USD pair. This will be followed by the meeting of the ECB on Friday.

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