GBP/USD on the way back to the 1.30 handle post FOMC minutes?

Currently, GBP/USD is trading at 1.2959, down -0.01% on the day, having posted a daily high at 1.3000 and low at 1.2927.

A fairly muted reaction in DXY to the FOMC minutes to start with right off the bat, although cable caught a bid at the time of writing from 1.2931 to 1.2970. The overall message from the Fed is that they thought it was prudent to wait for further evidence that the recent weak data was only transitory before hiking again and indeed they feel the weakness will pass.

The Fed officials still saw gradual tightening as appropriate although many Fed officials said they continued to see possible upside risks from an expansionary u.s. fiscal policy, but noted uncertainty around the outcome of the Trump administration's economic proposals. The labour market continues to improve with the jobless rate of 4.5% at or below the Fed official's long run levels. 

FOMC minutes: Fed policymakers agreed that details of balance sheet plan should be announced soon

More from the minutes:

• Nearly all fed policymakers expressed a favourable view of the staff proposal as a way to reduce central bank holdings in a gradual and predictable manner 
• Fed policymakers agreed that details of balance sheet plan should be announced soon, with start of reductions appropriate this year 
• Most fed officials viewed recent soft inflation as "transitory," though a few raised concerns that progress toward the central bank's 2 percent target had slowed 
• In general, fed officials said their assessment of the economy had changed little since the march policy meeting, with the labour market continuing to improve and risks from the global economy receding 
• Fed officials said they expected a rebound in consumer spending in coming months in light of solid economic fundamentals 
• Fed officials said they saw near-term risks to the economic outlook as roughly balanced, though several noted global geopolitical uncertainty and possible emerging market strains as u.s. rates rise 

As the market digests the minutes, it appears that there was nothing here to appease the dollar bulls or get anyone excited. It is still very much a wait-and-see story with respect to the data from the US economy. The DXY is now down 0.20% post minutes and yields have dropped -0.85% to 2.3606 from the highs of 2.2957%

GBP/USD levels

Valeria Bednarik, chief analyst at FXStreet noted that the short term, 1.2950 is the immediate support, although only below 1.2830, the base of its latest week's range will confirm a steadier decline, a quite unlikely scenario before June 8th. "Advances beyond 1.3000 will likely seen as selling opportunities, although a break above 1.3060 should trigger some stops and result in further gains up to the 1.3120 region."