GBP/USD drops toward 1.2900 after FOMC minutes

GBP/USD turned modestly lower after the release of the FOMC minutes. The greenback gained momentum across the board, particularity versus the yen and pushed cable to the downside. 

The pair initially rose toward daily highs, but quickly reversed to the downside. It fell to 1.2907 and currently trades at 1.2915, practically unchanged for the day. Earlier today it bottomed at 1.2892, the lowest in a week. The pound manged to rise back above 1.2900 and so far it has been able to hold on top. 

Minutes with modest impact 

The minutes were from the June 13/14 meeting, when the US central bank rose rates by 25bp. According to the document, several officials expressed concern over the effect of the recent measures on financial markets. The minutes showed no agreement on when to start unwinding Fed’s balance sheet. The impact so far across financial markets has been limited. 

FOMC Minutes: Policymakers saw recent increase in import prices as consistent with inflation trend in medium term

Technical outlook 

The pair is consolidating but still holds a mild bearish bias in the very short-term. A decline under 1.2900 would expose daily lows. Below that level, the correction from last week rally could gain momentum. Support levels could be seen at 1.2860 (Jun 27 high) and 1.2815 (Jun 14 & 19 high). 

To the upside, a break above 1.2940 could signal the end of the current correction. Resistance levels on top could be seen at 1.2960 (Jul 4 high), 1.2990 and 1.3030 (Jun 30 high).