GBP/USD's initial knee jerk reaction to the FOMC outcome, making fresh lows and highs

Currently, GBP/USD is trading at 1.3529, up 0.21% on the day, having posted a daily high at 1.3658 and low at 1.3495.

• Live Coverage: FOMC September 20th
• FOMC's decisions regarding monetary policy implementation - Sep 20, 2017
• FOMC statements: Comparison between July and September

Prior to the outcome of the FOMC, bulls were taking back control when cable rose by nearly a cent to 1.3608 the highs on the UK retail sales beat overnight and was making fresh pre-FOMC highs for the US session at 1.3601, in pursuit of London's aformentioned high. However, on the outcome of the FOMC, GBP/USD was two-way business on the knee-jerk, making a fresh high and low for the session.

FOMC main takeaways:

With the dot plot of the Fed's funds rate as the main focus, the FOMC continues to forecast one more hike in 2017, three more in 2018.

• The Federal Reserve left rates in the 1.00%-1.25% range.
• The Fed announced that it will begin to unwind of $4.5 trillion balance sheet in October.
• Hurricanes unlikely to affect the medium-term path of the economy.

Correlated reactions: 

• US ten-year yields have picked up to 2.2340 at the time of writing, but still -0.47% on the day.
• The DXY has popped to 91.95 at the time of writing.
• Stocks are mostly unchanged.
• WTI is little changed at 50.84. 

EUR/GBP: Having fallen half-a-penny to 0.8825 lows on the UK retail sales beat, the cross is now printing new lows at 0.8796 and remains down troddern. 

GBP/USD levels

Analysts at Commerzbank previously noted that critical resistance was located at 1.3670, a double Fibo and the 2014-2017 downtrend. They explained that given the convergence of resistance here we would expect this to hold the initial test and provoke some profit taking. "In order to alleviate immediate upside pressure the market will need to fall sub 1.3267 (August high)," the analysts added. 

Next in focus 

UK: Political whispers: ANZ

Yellen's presser coming up, and UK PM May's Brexit speech on Friday: Downing Street announced that a speech by Theresa May has been billed as an important moment in the Brexit negotiation process. This will take place in Florence 22nd September. 

UK: PM May’s speech about Brexit in the limelight - BBH