- GBP/USD trades virtually unchanged following the footprint of the previous session.
- Supply-chain bottlenecks, higher gas prices limited gains for sterling.
- US dollar remains elevated near 92.30 ahead of the FOMC meeting.
GBP/USD remains muted on Wednesday morning following the previous day’s sluggish momentum. The pair confides in a very narrow trade band with no meaningful traction.
As of writing, GBP/USD is trading at 1.3659 down 0.01% for the day.
The US Dollar Index (DXY), which tracks the performance of the greenback against its six major rivals, trades higher ahead of the FOMC two-day meeting, which will conclude on Wednesday.
A combination of factors assisted the upside momentum in the greenback. US Democrats passed a bill on Tuesday to fund the government through December 3 and suspended the country’s borrowing limit until the end of 2022.
In addition to that, upbeat economic data added to the optimism surrounding the US dollar. Housing Starts were up 3.9% to 1.615 million units in August, much above the market forecast of 1.554 million whereas the Building Permits rose 6.0% from the previous month in August.
Investors gear up for the FOMC two-day meeting for guidance on asset tapering and economic growth and inflation.
On the other hand, the sterling remained the worst major performer for the past few sessions and is expected to trade under pressure as the UK energy crisis and global stock market sell-off continues.
In addition to that, little support came for the British pound from US President Joe Biden and UK Prime Minister Boris Johnson face to face meeting on Tuesday, as there were no clear signs of early post-Brexit trade with the US.
As for now, traders await the US Fed Interest rate decision and the economic projections to gauge market sentiment.
GBP/USD levels to watch
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