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GBP/USD looking to test post-FOMC highs near 1.3150

1/31/2019, 3:48:53 PMMarket Analysis
GBP/USD looking to test post-FOMC highs near 1.3150

The GBP/USD pair is on a steady rise so far this Thursday and looks to test the post-FOMC highs at 1.3146, having paused its overnight retreat just ahead of the 1.3100 level.

The strength in the Cable is largely on the back of broad-based US dollar sell-off alongside the Treasury yields after the FOMC statement showed that the Fed switched to a patience stance on future rate hikes amid global growth concerns and muted price pressures. The dovish FOMC called for Goldman Sachs, the US banking giant, to reduce the odds of a March Fed hike to less than 5% vs. 10% previous.

Moreover, the buoyant tone around the higher-yielding pound remains intact amid a risk-on market profile, as traders remain expectant of an US-China trade resolution. The US President Trump is set to meet the Chinese Vice-Premier Liu He later today at 1930 GMT to discuss trade.

Looking ahead, the USD dynamics and the US-China trade-related developments will remain the main drivers for the pair, as markets continue to weigh in the uncertainty around the Brexit deal.

On Wednesday, “EU's Tusk met with PM May for last-minute talks, but his spokesman clarified that the backstop was a part of the withdrawal and was not up for renegotiation. Meanwhile, Labour leader Corbyn urged PM May to rule out a no-deal Brexit, while May responded that, for a no-deal to be out of the table there has to be a deal, and so far, Corbyn didn't back any of her proposals,” Valeria Bednarik, FXStreet’s Chief Analyst noted.

Calendar-wise, the UK docket remains data-light and hence, the focus shifts towards the US weekly jobless claims and regional PMI data for fresh dollar trades.