Dollar Gains Momentum Ahead of Fed Rate Decision

The US dollar gained momentum ahead of the Federal Reserve's interest rate decision on Wednesday, causing sterling to slip against it. The pound traded near $1.27, giving back some of its recent gains as market participants adjusted their positions in a cautious session.

Markets expect the Fed to hold rates steady at its current level, but attention is focused on the accompanying statement and economic projections for clues on the future path of monetary policy. A hawkish tone could further support the dollar, while a dovish tone might reverse its recent strength and offer relief to sterling.

The GBP/USD pair has been trading within a relatively tight range this week, with key levels seen at 1.2700 and 1.2780. A break below support could open the door to further losses toward 1.2630, while a move above resistance may target the 1.2850 area.