GBP/USD Price Analysis: Eyes 100-hour SMA/descending channel confluence hurdle ahead of FOMC

• GBP/USD edges higher on Wednesday amid softer USD, though lacks follow-through.
• The recent pullback constitutes the formation of a descending channel on hourly charts.
• Traders seem reluctant to place aggressive bets ahead of the central bank event risks.

The GBP/USD pair attracts some dip-buying on Wednesday and moves away from a multi-day low touched the previous day, though lacks follow-through. The pair maintains its bid tone through the early European session and is currently placed just above the 1.1500 psychological mark.

Speculations that the Fed will soften its hawkish stance amid signs of a slowdown in the US economy keep the US dollar bulls on the defensive and offer some support to the GBP/USD pair. Traders, however, seem reluctant to place aggressive bets and prefer to move to the sidelines ahead of the key central bank event risks. The Fed is scheduled to announce its policy decision later this Wednesday, which will be followed by the Bank of England meeting on Thursday. Investors will be looking for fresh clues about the pace of the rate-hiking cycle, which, in turn, should help determine the next leg of a directional move for the GBP/USD pair.

Looking at the broader picture, the recent corrective pullback from the vicinity of mid-1.1600s, or a six-week high, constitutes the formation of a descending trend channel on hourly charts. The top end of the said channel, currently around the 1.1545-1.1550 area, coincides with the 100-hour SMA and should act as a pivotal point. A sustained strength beyond will be seen as a fresh trigger for bullish traders and allow the GBP/USD pair to reclaim the 1.1600 round-figure mark. The momentum could get extended towards the 1.1645 area. Some follow-through buying would set the stage for an extension of the recent strong recovery from an all-time low.

On the flip side, the 200-hour SMA, around the 1.1460 area, could protect the immediate downside ahead of the descending channel support, near the 1.1410-1.1400 region. A convincing break below will negate any near-term positive bias and make the GBP/USD pair vulnerable to accelerate the slide towards the 1.1355-1.1350 zone. The next relevant support is pegged near the 1.1300 round-figure mark before spot prices eventually drop to the 1.1225-1.1220 region en route to the 1.1200 level.

GBP/USD 1-hour chart

Key levels to watch