GBP/USD retreats from 1-week highs, still above 1.3000

A recovery of the US dollar during the American session, amid a rally in equity prices, and a decline in US bonds, pushed GBP/USD from a 1-week high to the downside. The pair remains near session lows as the US Senate voted to begin debate on a bill to repeal Obamacare. 

GBP/USD losses strength 

The pound rose earlier to 1.3082, reaching the hight levels since July 18. Afterward pulled back and near the end of the day, it was trading at 1.3035, up 10 pips for the day. It is the third daily gain in a row for GBP/USD. The greenback is about to end the day little changed but with a better outlook, after the recovery that took place during the American session. 

Wednesday is set to be a volatile day for the pair. At 08:30 GMT, UK Q2 GDP data will be released. It is the preliminary reading. The economy is expected to have expanded 0.3%. Later, at 18:00 GMT, the Federal Reserve will announce its decision on monetary policy. No change in rates is expected. Traders will look for possible hints on a balance sheet normalization announcement in September. 

Technical outlook 

“The pair maintains a neutral-to-bullish stance, as in the 4 hours chart, the price holds above its 20 SMA and the 38.2% retracement of its latest bullish run, both around 1.3010, now the immediate support, although technical indicators remain directionless within positive territory”, said Valeria Bednarik, Chief Analyst at FXStreet. 

According to her, to the upside, the immediate resistance is 1.3050, the 23.6% retracement, ahead of July high of 1.3125.