Forex: GBP/USD jumped up to 1.4250 after Fed statement

Wed, Mar 18 2009, 19:05 GMT
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FXstreet.com (Barcelona) - Cable has risen more than 320 pips from the 1.3944 to 1.4266 after the FOMC decision to buy treasuries and to increase the MBS program to 1.25 Trillion Dollars.

Fed keeps rates on hold at 0.25%. Also, the FOMC statement has announced the decision of the Fed to buy treasuries and to increase the MBS program to 1.25 Trillion Dollars. Market reaction was to scream that risk appetite is back.

According Nick Nassad, currency market analyst with CMS Forex, this announcement should benefit most other assets, boosting risk sentiment: "The importance of the Fed's announcement is that by buying Treasuries the Fed will to exert pressure designed to lower rates on the many corporate, mortgage and consumer loans linked to benchmark government debt. That will be positive for increasing money supply and boosting lending."

Nick says related to the Cable: "The GBP/USD has some more clearer resistance levels from two weeks ago that should limit further gains by the Pound, and as we mentioned the weak unemployment data adds to a sense that the UK economy is still facing a deepening recession."

Nick concluded: "Thought I feel the 1.35 level should play as important resistance, a move towards the 200 M.A may mean a repeat of the surge in the EUR we saw in December which has an upside near 1.40/1.45. It seems that we have reached another pause in the dollar's fall."

GBP/USD

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