GBP/USD: up to fresh highs to the 1.23 handle post Yellen's presser
Currently, GBP/USD is trading at 1.2288, up 1.13% on the day, having posted a daily high at 1.2304 and low at 1.2146.
GBP/USD has made fresh highs and scored through the 1.23 handle on the back of a balanced statement and presser from Yellen with no changes to their economic outlook. The dollar has been sold off while the FOMC statement failed to deliver for the bulls. The Fed hiked rates by 25bps to 0.75%-1.00% but Fed futures are only pricing in one more rate hike for 2017. The longer-run on the dot plot was unchanged at 3%.
Yellen in her presser has been very clear that the Fed are confident that there are improvements in the global economy and US economy, although there are clear risks in the medium term of which will be discussed with her counterparts at this weekend's G20. Meanwhile, markets may well be taking note of the downgrades to the Fed Atlanta's additional projections for Q1 GDP below 1%; a further negative for the dollar.
- Fed's policy-setting committee did not flag any plan to accelerate the pace of monetary tightening - RTRS
- Fed's projections showed the economy growing by 2.1 percent in 2017
- FOMC's decisions regarding monetary policy implementation
- Fed's Yellen: It's uncertain just how much sentiment impacts spending decisions
- Fed's Yellen: Headwinds from financial crisis remain
- Fed's Yellen: Basis for rate hike is progress of economy
- Fed's Yellen: We want confidence in economy before shrinking balance sheet
- Fed's Yellen: Fed funds rate does not need to rise much to get to neutral
- Fed's Yellen: Core inflation has been little changed in recent months
- Fed's Yellen: Policy change does not represent reassessment of economic outlook
GBP/USD levels
Valeria Bednarik, chief analyst at FXStreet explained that from a technical point of view, "The 4 hours chart shows that the price bounced multiple times intraday from a bullish 20 SMA, whilst technical indicators regained the upside after testing their mid-lines, heading now north at fresh 1-week highs. The pair has a critical resistance at 1.2345, the 50% retracement of January's rally and February's low. If the price manages to break above it, the rally can extend up to 1.2425, the next Fibonacci resistance. Still, Brexit jitters weigh, and may trigger a sudden reversal on an approach to any of the mentioned resistances."
US debt crisis to be next catalyst for markets?