Search ForexCrunch
  • GBP/USD struggles around the daily lows ahead of FOMC.
  • The pound may get a boost from the UK-US trade relationship.
  • The rise in US yields keeps the Greenback stronger.
  • FOMC and tapering clues provide major traction to the traders.

The GBP/USD price broke out of its consolidated intraday range during the latest session in New York and plunged to a new monthly low around the 1.3620-30 range.

-Are you looking for the best CFD broker? Check our detailed guide-

What are the chances of the UK joining the North American Free Trade Agreement? Press outlets reported on this idea. This move would not be in the United States’ best interest but would likely stimulate trade between the United States and the UK and boost the pound. Otherwise, the GBP/USD is extremely vulnerable.

The pair struggled to take advantage of its modest gains but found a new supply around 1.3675-80 and could not capitalize on the restrained US dollar movement. The risk dynamics in the markets kept traders away from aggressive bull prices around the safe dollar.

On Thursday, ailing Chinese real estate giant Evergrande announced it would pay interest on its bonds. A moderate rise in US Treasury bond yields, along with expectations of an imminent Fed tapering, has made the dollar stronger.

In other words, the recent decline is purely due to a slight change of position on transactions before the FOMC policy decision is announced later today. Investing in the direction of the economy will depend on when the Fed announces its plan.

The test of 1.3600 in August appears to shield against an immediate drop from the 1.3570 lows. However, some subsequent sell-offs could set up a slide toward 1.3500 before Thursday’s Bank of England meeting.

GBP/USD price technical analysis: Bears to pounce 1.3600

GBP/USD 4-hour price chart
GBP/USD 4-hour price chart

The GBP/USD price hit the lows at 1.3617. However, the price found little traction, but the probability of hitting the 1.3600 support is quite imminent as the Greenback is gaining strength amid potential Fed tapering clues from the FOMC meeting. If the 1.3600 doesn’t hold, it may test YTD lows at 1.3570. The pair have done 79% average daily range. However, the pair may still abruptly move in either direction. On the upside, 1.3700 remains a stiff target for the bulls.

Looking to trade forex now? Invest at eToro!

67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.