GBP/USD clings to modest gains, still below 1.2200 mark ahead of US ADP/FOMC

• Manages to gain some traction in the absence of negative Brexit headlines.
• A modest USD pullback remained supportive ahead of the FOMC decision.

The GBP/USD pair extended its sideways price action and remained confined in 30-pips narrow trading band through the mid-European session on Wednesday.

After the previous session’s intraday slump to fresh 28-month lows and a subsequent bounce, the pair managed to regain some positive traction on Wednesday in absence of any fresh negative Brexit headlines and a modest US Dollar pullback.

The uptick, however, lacked any strong bullish conviction and the pair remained well below the 1.2200 round figure mark as investors still seemed reluctant to buy the British Pound amid expectations that the UK will crash out of the European Union on October 31.

Given that the new UK PM Boris Johnson has already stated that he won’t meet EU leaders unless they are willing to abandon the Irish backstop, coupled with the fact that there are no signs of the EU shifting its position might continue to keep a lid on the pair’s attempted recovery.  

Investors might also be reluctant to place any aggressive bets ahead of the key central bank meetings – starting with the highly anticipated FOMC policy decision later during the US trading session on Wednesday and the latest BoE monetary policy update on Thursday.

Heading into Wednesday’s main event risk, the US economic docket – highlighting the release of ADP report on private-sector employment, might influence the USD price dynamics and produce some short-term trading opportunities.

Technical levels to watch