GBP/USD drops from weekly highs near 1.3980 post-FOMC and Brexit final call

• GBP/USD rose sharply after the FOMC decision, however, it lacked strength near 1.3980.

• The GBP took a breather after getting a final OK from the EU over Brexit.

• Risk-prone investors are likely to give support to cable.

The GBP/USD pair maintains its strength from Wednesday lows near 1.3850 and accumulates a move above 100 pips posting its strong gains in the past few sessions. The pair refreshed its weekly high near 1.3980, although the pair seems to find it difficult to sustain above the mentioned level.

At the time of writing, the GBP/USD pair is trading 1.3956, up 0.18% on the day.

The pair gains at the expense of the US dollar index (DXY), which tracks the movement of the greenback against its counterpart. The index lost its ground on Wednesday and fell to multi-week lows below 90.55, thus exerting pressure on the pair. The move was exclusively sponsored by the unchanged and widely anticipated tone of the US central bank approach on its current accommodative monetary policy with the Fed maintained status-quo on short term interest rates and a bond-buying program. Fed Chair Jerone Powell's comments came just before US President Joe Biden’s first speech to Congress on the unveiling of a sweeping package for families and education. Investors already discounted the decision and, thus, remained unfazed largely by the announcement.

On the other hand, the sterling benefits from better economic recovery prospects after the pick up in covid vaccine roll-out programme overcoming some initial hiccups in the supply of the essential vaccine. Moving on,  the optimism around the Brexit deal, after the EU Parliament voted by a large majority to give the final approval to the Brexit deal amid chaos, complaints and a court challenge, lifted the sentiment around sterling. As per the tally total of  660 votes in favour, with five against and 32 abstentions. 

As said, the gains were seemed limited after Arlene Foster,  the leader of Northern Ireland faces a party nauseated over the Brexit fallout, followed by the Scottish election on May 6 that holds risk for the pound against the dollar and euro.

As for now, investors await the US advance Q1 GDP release and the Price Index on a quarterly basis for fresh trading impetus.