Pulls back from three-week high, holds on gains above 1.3200

• GBP/USD bias remains bullish with RSI favoring buyers, although profit-taking ahead of Fed decision limits further gains.
• A 25bps Fed rate cut could see GBP/USD decline towards support at 1.3200, 1.3151 and 1.3100, with a potential retest of 1.3001.
• A 50bps cut could push GBP/USD above 1.3300, targeting the March 2022 high of 1.3437.

Sterling made modest gains during the North American session, hitting a three-week high of 1.3254, but failed to gain traction as traders braced for the Federal Reserve’s monetary policy decision. As a result, GBP/USD traders dragged the exchange rate towards 1.3205, still above its opening price by 0.30%.

GBP/USD Price: Technical Insights

The GBP/USD bias is bullish, although it has failed to make new yearly highs due to a possible scenario change. At the time of writing, the Relative Strength Index (RSI) favors the buyers, while price action suggests they are booking profits ahead of the Fed.

If Powell and Co. decide to cut rates by 25 basis points (bps), further downside will be seen in GBP/USD. This will bring the 1.3200 figure and the daily low of 1.3151 into play. If these levels are removed, the next support would be 1.3100 before the last low of the cycle at 1.3001, the lowest since 9/11.

On the other hand, a 50bps cut could see GBP/USD break past 1.3300, opening the door for a test of the March 1, 2022 top at 1.3437.

GBP/USD Price Action – Daily Chart