GBP/USD holds steady above mid-1.2000s post-US data, focus remains on FOMC

• GBP/USD caught fresh bids on Wednesday amid the emergence of some USD selling.
• The risk-on impulse is turning out to be a key factor undermining the safe-haven USD.
• Upbeat US Durable Goods Orders could do little to provide any meaningful impetus.
• The focus remains glued to the FOMC policy decision, due later during the US session.

The GBP/USD pair maintains its bid tone through the early North American session and moves little in reaction to the US macro data. The pair, however, has retreated a few pips from the daily high and is now seen trading just above mid-1.2000s.

A goodish recovery in the global risk sentiment - as depicted by a generally positive tone around the equity markets - is undermining the safe-haven US dollar and offering support to the GBP/USD pair. The USD bulls, meanwhile, seemed rather unimpressed and largely shrugged off better-than-expected US economic data.

The monthly data published by the US Census Bureau showed that Durable Goods Orders in the US increased by 1.9% in July, beating expectations pointing to a 0.4% decline by a big margin. Orders excluding transportation items were also higher than consensus estimates and came in to show a 0.3% growth during the reported month.

The data eased concerns about an economic downturn, though could do little to provide any meaningful impetus to the USD or the GBP/USD pair. Traders seem reluctant and prefer to wait on the sidelines ahead of the highly anticipated FOMC monetary policy decision, scheduled to be announced later during the US session.

The US central bank is widely expected to raise interest rates by 75 bps to tame red-hot inflation. Market participants, however, are divided over the need for a more aggressive policy tightening. Hence, the focus will remain on the policy statement and Fed Chair Jerome Powell's comments during the post-meeting press conference.

Technical levels to watch