GBP/USD drops like a stone to fresh lows following hawkish FOMC minutes

GBP/USD is currently trading at 1.4114 following the Federal Open Market Committee's minutes while down some 0.47% on the day having travelled from a high of 1.4200 to a low of 1.4109 and counting. 

The minutes showed that there are prospects for adjustments to the pace of purchases if the economy continues to make rapid progress towards the Committee's goals. 

Some officials saw taper talk starting at upcoming meetings but note that the economy remains far from its goals. 

Nevertheless, it was a hawkish enough set of minutes to support a bid in the greenback and send US yields higher. 

DXY rallied to score 90.1340 and be 0.38% up on the day, way off the lows of 89.6880. The 10-year yield is 2.61% higher after reaching a high of 1.6810%.

Earlier in the day, the sterling had already hit its lowest in more than a week against the euro after data showed a doubling of consumer price inflation in Britain in April.

British consumer prices rose by 1.5% in April, the Office for National Statistics said, following a 0.7% rise in March vs an increase of 1.4% expected.

''The Bank of England says inflation in Britain is heading above its 2% target and will hit 2.5% at the end of 2021 thanks to a rise in global oil prices and the expiry in September of COVID-19 emergency cuts to value-added tax in the hospitality sector, as well as comparisons with the pandemic slump of 2020,'' Reuters reported following the data releases noting that the tapering of the BoE's asset purchase programme has helped the pound gain relative to its peers in the G10 group of currencies.

''Money market pricing of BoE rate hikes after the inflation data were just a shade higher. May 2022 futures contracts are now pricing in about 6 bps in cumulative hikes until then, compared with 5 bps on Tuesday.''