Sterling received a boost off its early NorAm low 1.3785, trading in positive territory at 1.3820, after U.S. durable goods came in below forecast nAPN073MB3, despite healthy upside revisions to May's data.
The lackluster durable goods data reversed the dollar's haven bid emanating from the shakeout in Chinese equities due to recent regulatory moves nL1N2P203A, which had also boosted the yen and U.S. Treasuries.
For now, the drop in China equities has been contained with only tangential affects on developed markets, though these muted reactions may become more overt after Wednesday's Fed rate announcement and presser.
While no Fed rate or taper moves are expected, the market will scrutinize the statement and presser for hints at future moves.
Of key interest for market participants will be the Fed's view on the stickiness of the recent rise in inflation and the resurgence of COVID cases.
GBP traders will look to the Fed for hints at UK policy ahead of the Aug. 5 MPC.
Though the BoE's Gertjan Vlieghe walked back some of his hawkish rhetoric nL8N2P239D there remains a growing hawkish BoE contingent, which is likely to keep GBP/USD anchored near early Junes 2021 high at 1.4250 as the BoE begins its trek toward policy normalization.
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