GBP/USD advances above 1.2970 as focus shifts to FOMC meeting
|- GBP/USD is rising for third straight day on Wednesday.
- Annual Core CPI in August declined to 0.9% in the UK.
- US Dollar Index posts modest losses below 93.00 ahead of the FOMC event.
The GBP/USD pair preserved its bullish momentum during the European session on Wednesday and rose to its highest level in nearly a week at 1.2973. As of writing, the pair was up 0.65% on the day at 1.2970.
Earlier in the day, the data published by the UK's Office for National Statistics showed that the annual inflation, as measured by the Core Consumer Price Index (CPI), slumped to 0.9% in August from 1.8% in July. However, this reading came in higher than the market expectation of 0.6%.
Eyes on Brexit, FOMC's September meeting
Meanwhile, latest Brexit headlines seem to be helping the British pound stay resilient against its rivals.
Commenting on the latest political developments, "PM Boris Johnson has been seeking to soothe concerns about the controversial Internal Markets bill that passed the first hurdle in parliament, said FXStreet analyst Yohay Elam. "Several members of the PM's ruling Conservative Party have either abstained or voted down the legislation – and others were expected to follow. If the final wording refrains from breaking international law, the pound could extend its gains.”
On the other hand, the broad-based USD weakness is also providing a boost to GBP/USD. The US Dollar Index, which closed virtually unchanged on Tuesday, was last seen losing 0.25% on the day at 0.24%.
Following the Federal Reserve's announcement of a policy shift to average inflation targeting, investors don't expect the FOMC meeting to yield a surprising outcome. Nevertheless, the Fed's updated Economic Projections and FOMC Chairman Jerome Powell's press conference will be watched closely by the market participants.
Technical levels to watch for
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