GBP/USD on the defensive, holds above 1.30 mark ahead of FOMC

• GBP/USD continues to be weighed down by BoE rate cut speculations, Brexit fears.
• The USD holds steady despite weaker US bond yields and added to the weaker tone.
• The downside seems cushioned ahead of the FOMC decision and BoE on Thursday.

The GBP/USD pair remained depressed for the fifth consecutive session on Wednesday, albeit has managed to hold its neck above the key 1.30 psychological mark.

The pair failed to capitalize on the previous session's late rebound from over one-week lows, rather met with some fresh supply on Tuesday and was being weighed down by a combination of negative factors.

Traders seemed reluctant ahead of FOMC

The British pound remained on the defensive amid prospects for an imminent interest rate cut by the Bank of England on Thursday and persistent fears that Britain might crash out of the EU at the end of this year.

This coupled with the prevailing US dollar buying interest – despite a weaker tone surrounding the US Treasury bond yields – further contributed to the pair's weaker tone through the mid-European session.

The downside, however, remained cushioned as investors now seemed reluctant to place any aggressive bets and prefer to wait for the outcome of the two-day FOMC policy meeting, due later this Wednesday.

The Fed is widely expected to keep interest rate unchanged at 1.50-1.75% and hence, investors will look for any major changes in the accompanying policy statement, which might provide some impetus to the major.

The key focus, however, will remain on the highly anticipated BoE policy meeting on Thursday, which along with any Brexit-related headlines will play a key role in determining the pair's next leg of a directional move.

Technical levels to watch