The Pound retreats back towards 1.30 as the US Dollar strengthens significantly following yesterday’s hawkish FOMC statement. The Pound’s two week rally cooled down as the FOMC reiterated their intention to continue hiking rates gradually as they believe economic activity and household spending will remain strong. Moreover, rate hikes will remain in place as US inflation continuously prints close to the Fed’s 2% target. For today, the Pound will continue to be pressured by the US Dollar as investors continue to digest yesterday’s statement. In addition to that, the Pound will also be driven by today’s UK GDP figure release and any updates related to the Brexit negotiations.
The Pound drops towards the 200-period moving average as the US dollar pressures the British currency lower. Prices are currently at a key area as the 200-period moving average helps in determining the future bias of the pair. Depending on the UK GDP results, the pair will either break below the 200-period moving average paving the way for a drop towards 1.2930 or the pair will bounce off the 200-period moving average and rise towards 1.3095.
Support: 1.29084 / 1.2930
Resistance: 1.3094 / 1.3134