GBP/USD dumps the 1.53 handle after FOMC statement

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Oct 28, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Guatemala) - GBP/USD is currently on the offer on the back of a less dovish than expected FOMC statement. The price has dropped the 1.53 handle and making new lows below the 200 DMA at 1.5333, trading at 1.5256 at time of writing.

    The Fed, as expected, has left rates on hold. The vote was 9-1 with Lacker who dissented yet again. Markets look for signs of whether December is on the cards, or how likely it is that the Fed will start to normalise its interest rates policies and making December the lift-off period in order to make incremental rate rises throughout 2016.

    Full text October FOMC statement

    The statement said that the economy has a moderate growth rate with labour market slack diminishing, but inflation has been running below target, while at the same time removing comments that the Global developments were hindering growth. So this has been less dovish than what it might have been given the downturn in data we have seen in the US since the last meeting. The statement also said that they still see inflation rising towards 2% in the medium term, but in order to start normalising, the committee need to see further job gains, maximum employment and need more confidence in inflation.

    GBP/USD levels

    To the downside, Karen Jones, chief analyst at Commerzbank explained that the 1.5202/00 low from mid October is a key area of support. "Failure here is required to retarget the 1.5172/55 June and September lows en route to the 1.5108 1st October low. The more important 1.5086/1.5000 support, which is the 61.8% retracement and psychological support is likely to provide strong support."
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