GBP/USD struggles near one-month lows, around 1.3635 region ahead of FOMC

• GBP/USD met with some fresh supply on Wednesday and refreshed monthly lows.
• Bulls seemed unimpressed by a subdued USD price action amid the risk-on impulse.
• Some cross-driven weakness stemming from EUR/GBP weighed on the British pound.

The GBP/USD pair broke down of its intraday consolidative trading range and dropped to one-month lows, around the 1.3635-30 region during the first half of the European session.

The pair struggled to capitalize on its modest uptick, instead met with some fresh supply near the 1.3675-80 region and failed to benefit from a subdued US dollar price action. The risk-on impulse in the markets held traders from placing any aggressive bullish bets around the safe-haven greenback.

The global risk sentiment got a lift after China's struggling property giant Evergrande said it would pay the bond interest due on Thursday. That said, expectations for an imminent Fed taper announcement, along with a modest uptick in the US Treasury bond yields acting as a tailwind for the greenback.

Hence, the downtick could be solely attributed to some repositioning trade ahead of the crucial FOMC policy decision, scheduled to be announced later this Wednesday. Investors will look for clues about the likely timing of the Fed's tapering plan before placing fresh directional bets.

Meanwhile, some cross-driven weakness stemming from a fresh leg up in the EUR/GBP cross further contributed to the GBP/USD pair's intraday decline. This marks the fourth day of a negative move in the previous five sessions and might have already set the stage for further losses.

From current levels, the 1.3600 round-figure mark testing in August seems to protect the immediate downside ahead of YTD lows, around the 1.3570 region. Some follow-through selling should pave the way for a slide to the key 1.3500 psychological mark heading into the BoE meeting on Thursday.

Technical levels to watch