GBP/USD keeps the red below mid-1.3300s after US PPI, focus remains on FOMC
| • Hotter-than-expected US PPI fails to provide any meaningful impetus.
• Investors seemed to hold back ahead of the key FOMC announcement.
The GBP/USD pair held on to its weaker tone through the early North-American session and had a rather muted reaction to the US economic data.
The latest UK CPI print added to the recent slew of disappointing UK macro releases and kept exerting downward pressure on the major on Wednesday. The selling pressure abated ahead of the 1.3300 handle, with the pair recovering around 30-pips from daily lows amid a modest US Dollar retracement.
A subdued action around the US Treasury bond yields failed to assist the greenback to preserve early gains and helped the pair to rebound from over one-week lows. The recovery bounce, however, struggled to gain any follow-through traction and was being capped by hotter than expected US PPI figures for May, coming in to show m/m rise of 0.3% and 3.1% on a yearly basis.
Moreover, investors also seemed to refrain from placing any aggressive bets ahead of today’s key event risk – the latest FOMC monetary policy update, which would play a key role in determining the pair's next leg of directional move.
Technical outlook
Valeria Bednarik, FXStreet's own American Chief Analyst writes: “The 4 hours chart for the pair favors additional declines ahead as, despite multiple attempts, it was unable to advance beyond a bearish 20 SMA, while technical indicators accelerate their slides below their mid-lines. A break below the daily low should lead to a continued advance towards 1.3265, while further weakness exposing the 1.3220 region.”
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