GBP/USD sticks to positive bias post-US ADP report, above mid-1.3600s
- GBP/USD gained strong positive traction on Wednesday and reversed the overnight losses.
- A modest USD weakness prompted some short-covering ahead of the key FOMC decision.
- The USD bulls remained on the defensive following the release of the upbeat US ADP report.
The GBP/USD pair added to its intraday gains and shot to fresh daily tops, around the 1.3660 region heading into the North American session.
Having defended the 1.3600 mark, the GBP/USD pair staged a goodish rebound on Wednesday and has now reversed the previous day's losses to three-week lows. The uptick lacked any obvious fundamental catalyst and could be attributed to a modest US dollar weakness amid some repositioning trade ahead of the key event risk.
The USD bulls remained on the defensive and largely shrugged off a stronger ADP report, which showed that the US private-sector employers added 571K jobs in October. This was above the 400K anticipated and slightly higher than the 568K reported in the previous month, though did little to provide any meaningful impetus.
The market focus remains glued to the outcome of a critical FOMC meeting, scheduled to be announced later during the US session. The Fed is widely expected to begin tapering its $120 billion-a-month bond purchase program, though the investors will look for clues about the likely timing for the Fed's policy tightening.
Hence, the accompanying monetary policy statement and Fed Chair Jerome Powell's comments at the post-meeting press conference will draw plenty of market attention. This, along with the Bank of England meeting on Thursday, should assist investors to determine the next leg of a directional move for the GBP/USD pair.
In the meantime, the impasse over the Northern Ireland Protocol, along with worries that the UK Prime Minister Boris Johnson will trigger Article 16 might hold bulls from placing aggressive bets. This, in turn, warrants some caution before confirming that the GBP/USD pair has bottomed out and positioning for any further gains.
Technical levels to watch