GBP/USD refreshes session high at 1.3067, eyes on FOMC

Earlier in the day, the GBP/USD pair came under pressure following the dismal GDP growth figures from the U.K., however, was able to reverse its course after finding support at the critical 1.30 handle and move into the positive territory. At the moment, the pair is trading at 1.3062, up 0.27% on the day.

Although today's data dampened expectations of a hawkish BoE move in its meeting next week, the improved risk sentiment helped the cable limit its losses against its peers. Furthermore, Chancellor Philip Hammond, who said that the Brexit would have to come to an end before the 2022 election to prevent it from being reversed and added that talks on a transitional Brexit deal with the EU should start in autumn, provided an additional boost with his comments. However, economists at ING argue that an agreement on a transition is unlikely to happen until the last quarter of 2017, which could leave corporates under duress.

• Brexit: Transition deal talk picks up, but still lots of other divorce details to agree first - ING

Before the FOMC releases its statement later in the session, the US Dollar Index is moving calmly around the 94 mark. Investors don't think that the Committee would make any changes to the language of the statement in a non-live meeting where there won't be the usual press conference. The economic calendar won't be featuring any significant data from the U.K. and news regarding the Brexit negotiations and the DXY movements could continue to impact the pair's price action.

• FOMC Preview: 12 major banks expectation from July meeting

Technical outlook

Unless the pair makes a daily close below the 1.30 handle, it could remain bullish in the short-term. The RSI on the daily graph shows that the pair still has more room to the upside. 1.3080 (Jul. 25 high) aligns as the initial hurdle ahead of 1.3200 (psychological level) and 1.3250 (Sept. 16 high). On the downside, supports could be encountered at 1.3000 (psychological level), 1.2930 (Jul. 20 low) and 1.2880 (50-DMA). 

• GBP/USD in a 1.2920/1.3100 range – UOB