GBP/USD explodes higher on the FED’s decisions to stay put

FXstreet.com (London) - GBP/USD had a high of 1.5982 and a low of 1.5892 prior to the release of the FED’s interest rates decision to stick with where they are for the time being. The GBP/USD jumped to 1.6050.

The recent data has been coming in weaker than expected and some participants had predicted a no change to their policy, but overall this has come as a shock to the markets and very dovish. The Fed is not tapering, worried about tightening conditions and fiscal policies as well due to specific economic conditions. They are being very cautious with regards to the housing data especially. So they want more evidence of improvements before they make any adjustments to the pace of tightening or tapering. They are not changing any of their thresholds and will take a balance approached with regards to inflation of 2% and the unemployment rate. Markets had been pricing in a dovish tone from the FOMC and between $5B - $15B cut in monthly QE purchases with a renewed emphasis on forward guidance in relation to unemployment thresholds between 6.5% and 6.0% as the FED tries to manage expectations for policy firming. We await the FOMC policy statement and press conference now.

GBP/USD levels

Indicators suggest momentum has slowed down. The 20 DMA is 1.5657, the 50 DMA is 1.5473 and the 200 DMA is 1.5486. Supports are ascending from 1.5936 and 1.5963 and 1.6000 where the pair jumped through to Spot 1.6040 where the pair sits currently between and 1.6058 the high while resistances are 1.6040 and 1.6080.

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