GBP/USD climbs to fresh multi-month tops, inching closer to 1.3000 ahead of FOMC

• GBP/USD gains traction for the ninth straight session on Wednesday amid renewed USD selling.
• The impasse over the US fiscal stimulus, dovish Fed expectations continued weighed on the USD.
• Wednesday’s key focus will remain on the highly anticipated FOMC monetary policy update.

The GBP/USD pair edged higher during the early European session and climbed to fresh multi-month tops, around the 1.2975 region in the last hour.

The pair breakout of its Asian session consolidative range and turned positive for the ninth consecutive session on Wednesday. The emergence of some fresh selling around the US dollar was seen as a key factor that assisted the GBP/USD pair to inch back closer to the 1.3000 psychological mark.

The greenback struggled to capitalize on the previous day’s attempted bounce and languished near two-year lows. The USD was pressured by the impasse over the next round of the US fiscal rescue package comes and expectations of a potential dovish shift in the Fed’s monetary policy stance.

Investors remain worried that the economic recovery in the US could be grinding to a halt in the wake of the resurgence in coronavirus cases. This, in turn, has been fueling speculations that the Fed will add more stimulus for a longer period and in bigger quantities to support the economy.

Bullish traders seemed rather unaffected by renewed fears of a no-deal Brexit. It is worth reporting that the latest round of negotiations ended last Thursday without making any significant progress. Talks remained at a stalemate ahead of July deadline for striking a preliminary agreement.

Nevertheless, the GBP/USD pair seems poised to build on its recent appreciating move, albeit overbought conditions on the daily chart warrant some caution before placing aggressive bullish bets. Hence, a modest pullback, heading into Wednesday’s key event risk, cannot be ruled out.

Technical levels to watch