GBP/USD drops to the 1.3200 area ahead of the FOMC statement

Pound erases UK CPI gains, turns negative versus US dollar.
GBP/USD key levels seen at 1.3300 and 1.3180.
Traders await the FOMC statement, its projections and Powell.

Matías Salord FXStreet

The US Dollar gained momentum during the American session amid a decline in equity prices and also ahead of the FOMC statement. GBP/USD dropped from weekly highs near 1.3285 to 1.3205, turning negative for the day.

The pound lost momentum and erased the gains that followed the release of higher-than-expected UK inflation data on European hours. Now, market participants have their attention set on the Fed.

The GBP/USD is moving sideways facing a strong resistance below 1.3300 while on the downside support is seen around 1.3180. Those two levels will likely be challenged during the next sessions.

Fed today, BoE tomorrow

The Federal Reserve will announce its decision at 19:00 GMT. The central bank will issue the statement and economic projections. Thirty minutes later Jerome Powell will deliver a press conference.

What the FOMC decides, its projections and Powell’s comments will likely rock markets, including the US dollar.

On Thursday, market participants will learn about the decision of the Bank of England. Market consensus sees no change in rates but some speculate with a rate hike amid rising inflation and an improvement in the labor market in the UK, offset by the surge of COVID cases. “We expect the BoE to leave policy on hold, with a message of COVID uncertainty and data dependency providing few clues to a February hike either, though they likely keep the option on the table. QE will conclude as expected this month”, said analysts at TD Securities.

Technical levels

GBP/USD

Overview
Today last price	1.3216
Today Daily Change	-0.0006
Today Daily Change %	-0.05
Today daily open	1.3222

Trends
Daily SMA20	1.3313
Daily SMA50	1.3502
Daily SMA100	1.3632
Daily SMA200	1.3778

Levels
Previous Daily High	1.3257
Previous Daily Low	1.3191
Previous Weekly High	1.3289
Previous Weekly Low	1.3161
Previous Monthly High	1.3698
Previous Monthly Low	1.3194
Daily Fibonacci 38.2%	1.3232
Daily Fibonacci 61.8%	1.3216
Daily Pivot Point S1	1.319
Daily Pivot Point S2	1.3158
Daily Pivot Point S3	1.3125
Daily Pivot Point R1	1.3255
Daily Pivot Point R2	1.3289
Daily Pivot Point R3	1.332

Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

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