GBP/USD is a touch lower on the dovish FOMC minutes

GBPUSD has proven to be relatively stable on the release of the Federal Open Market Committee's minutes released at the turn of the hour. Indeed, a dovish set of FOMC minutes have been released with a couple of members calling for a 50 basis point cut to address low inflation, but most viewed the rate cut as a mid-cycle adjustment, which is what the markets had known.  However, what is rather alarming is the Fed is contemplating more than just quantitative easing should there be signs of a pending recession.*

FOMC minutes highlights:

• Participants said forward guidance and QE might not be enough to eliminate protracted risks at lower bound.*
• Several said uncertainties remained about the efficacy of QE.*
• A number of Fed officials stressed need for Fed flexibility.
• A couple policymakers would have preferred a 50 bp cut to address low inflation.
• Several favored maintaining rates unchanged.
• Those who favored cut pointed to decelerating economy, elevated risks on global economy and inflation.
• A few policymakers expressed concern of 3m/10y yield curve inversion.

Brexit headlines to keep GBP under the spotlight

Meanwhile, PM Boris Johnson is in Berlin meeting with Chancellor Angela Merkel this evening - Merkle has said that they don't have a solution and the bar for anything other was higher considering there had been a push back on the letter he sent to Tusk earlier this week, so it is unlikely that there will be any progress made with her so soon, but headlines, nonetheless, should be a near-term driver for the Pound which is already stalling on the upside. France's Macron said that unless the UK changes course, Brexit cannot be delayed
- "UK political crisis cannot ‘jeopardize’ peace in Ireland".

GBP/USD levels

Analysts at Commerzbank explained that the GBP/USD’s rally has already started to erode the 20-day-ma at 1.2157 - We have seen a low today of 1.211 so far although GBP is relatively steady post the FOMC minutes. 

"Last week the market based at 1.2015 and is correcting higher near term. The market remains underpinned by the January 2017 low at 1.1988 (we have a 13 count on the daily chart and TD support is 1.1988). We would allow for a rebound to the down channel at 1.2325. Below 1.1988 lies the 1.1491 3 rd October low (according to CQG)."