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GBP/USD – Cable Trades Positive Post Fed Rate Decision

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Aayush Jindal

Key Highlights

  • The British Pound remained in an uptrend and recently moved above 1.3120 against the US Dollar.
  • There are two important bullish trend lines with support near 1.3030 and 1.2980 forming on the 4-hours chart of GBP/USD.
  • Yesterday, the Fed interest rate decision was announced, and the central bank kept rates at 1.25% as per the market forecast.
  • The statement regarding monetary policy highlighted worries about low CPI, which diminishes chances of a rate hike in December 2017.

GBPUSD Technical Analysis

The British Pound made decent ground against the US Dollar and traded above 1.3000 and 1.3100. The GBP/USD pair remains in an uptrend with supports such as 1.3110, 1.3080 and 1.3030.GBPUSD Technical Analysis British Pound US DollarThe pair recently broke a major resistance area near 1.3100-1.3110, opening the doors for more gains. There was even a break above a short-term connecting bearish trend line at 1.3060 on the 4-hours chart.On the downside, there two important bullish trend lines with support near 1.3030 and 1.2980 forming on the same chart.It seems like the pair is about to test the 1.236 extension level of the last decline from the 1.3125 high to 1.2932 low. The overall trend is positive as long as the pair is above the most important 1.3030-1.3000 support.

Fed Interest Rate Decision and Initial Jobless Claims

Yesterday, the Fed interest rate decision was announced (July 2017). The market was positioned for no change in the interest rate from 1.25%, and the result was as per the market forecast.However, there were a few important points to note from the statement regarding monetary policy. The main point was about the low level of inflation (CPI). The mention and concerns about the low CPI decreased the chances of a possible rate hike in December 2017.The report added that:
Inflation on a 12-month basis is expected to remain somewhat below 2 percent in the near term but to stabilize around the Committee's 2 percent objective over the medium term. Near-term risks to the economic outlook appear roughly balanced, but the Committee is monitoring inflation developments closely.
Overall, the US Dollar was pressured, and pairs like EUR/USD and GBP/USD gained traction. Today, the Initial Jobless Claims for the week ending July 22, 2017 will be released by the US Department of Labor. The forecast is of a rise from 233K to 241K. If there is a substantial increase in claims above $240K, the US Dollar may continue its decline in the near term.
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