GBP/USD pierces 1.3300 on US data, Fed takes the spotlight

• United States first-tier data releases showed why it is the world's largest economy.
• The Federal Reserve will announce its decision on monetary policy in the American afternoon.
• GBP/USD trades at its lowest since mid-May, without signs of downward exhaustion.

The GBP/USD pair shed over 60 pips early in the American session on Wednesday and defies the 1.3300 figure, as investors weigh better-than-expected United States (US) data. The Sterling Pound (GBP) held ground throughout the first half of the day, but capitulated to broad US Dollar (USD) demand.

US economic resilience largely proved

Without data from the United Kingdom, the focus is on the US, which released several first-tier figures. On the one hand, the the July ADP Employment Change report showed that the private sector added 104K new positions in July, much better than the 78K expected. Furthermore, June reading was revised to -23K, better than the -33K previously reported.

The country then reported the flash estimate of the Q2 Gross Domestic Product (GDP), showing that the economy expanded at an annual rate of 3% in the second quarter, much better than the 2.4% anticipated or the -0.5% from Q1. Finally, the core Personal Consumption Expenditures (PCE) Price Index rose by 2.5% in the same quarter, down from the 3.5% posted in the three months to March.

The combination of upbeat figures showed the US economy is beyond resilient in a critical moment: the Federal Reserve (Fed) will announce its decision on monetary policy in the American afternoon. The Fed is widely anticipated to keep the benchmark interest rate on hold, floating between 4.25% and 4.50% amid policymakers' concerns related to the potential impact of tariffs on the economy.

US President Donald Trump has expressed his anger at the Fed's stubbornness to keep interest rates so high, and demanded that it be trimmed by at least 3 points. Whereas the Fed announces today, the focus will clearly be on the President's response to the decision. Fresh threats to fire Chair Jerome Powell will likely be at the top of Trump's list.

Technical perspective: Lower lows in sight

The GBP/USD pair has fallen for six consecutive days and currently trades at levels that were last seen in mid-May. The strong downward momentum is clear in intraday time frames with technical indicators in the 4-hour chart heading south within oversold readings but far from suggesting downward exhaustion.

The first line of buyers stands at around 1.3250, followed by the 1.3200 mark. A break below the latter will back the case of a steeper decline towards the critical 1.3000 threshold. On the upside, investors will be looking for a recovery beyond 1.3360 before feeling confident enough to add longs, aiming them for a test of the 1.3420 area.