GBP/USD sees gains after Fed discussed a possible pause on its tightening cycle

The GBP/USD advances after the release of the US Federal Reserve Open Market Committee (FOMC) minutes for the last meeting showed that officials discussed a possible pause in their tightening campaign. Therefore, the GBP/USD is trading at 1.2489 after hitting a daily low of 1.2398.

FOMC’s minutes flashed a pause and a 50 bps rate hike

In the latest Fed monetary policy reunion, officials considered a pause after the failure of two regional banks amidst fears that further tightening could cause financial stress. Nevertheless, those participants and others agreed that actions taken by the Fed calmed worries in the banking sector. The measures taken by the Fed were similar to those of the Bank of England (BoE) after the bond turmoil due to the ex-PM Liz Truss’s mini-budget, given the backdrop, that supported a 25 bps rate hike by the Fed at their latest meeting.

Participants commented that inflation is still above the 2% goal and that inflation pressures were “abating at a pace sufficient to return inflation to 2% over time.” Some Fed members noted that they considered a 50-basis point increase if there was not a banking crisis. Furthermore, Fed policymakers observed, “that inflation remained much too high and that the labor market remained too tight.”

Earlier, an inflation report from the US revealed that headline CPI dropped from 6% in February to 5% annually. However, core inflation, which excludes food and energy, remained at 5.6% YoY, unchanged.

GBP/USD Technical Analysis

After snapping on Tuesday, four days of straight losses, the GBP/USD is poised to test the 1.2500 figure in the near term. Even though the 100-day EMA remains below the 200-day EMA, it’s about to cross over, cementing the case for the GBP bullish bias. Though a decisive break of 1.2500, the GBP/USD pair could rally and test the June 9 high at 1.2599, ahead of clearing 1.2600.