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GBP/USD has hit fresh three-month highs amid US dollar weakness as the Fed decision is set to overshadow sterling downers, Yohay Elam, an analyst at FXStreet, informs.

Read: Fed Preview: Nine major banks expectations

Key quotes

“The Fed is set to leave interest rates unchanged but reiterate its pledge to support the economy. The central bank also publishes new growth, employment, inflation, and interest rate forecasts. Markets will want to see when the bank expects to see single-digit employment and a return to pre-pandemic output.”

“Some speculate that the Washington-based institution may launch Yield Curve Control (YCC) – to keep long-term rates lower, thus pushing the dollar down. Negative rates seem off the agenda, but further expanding the balance sheet is on the cards. The Fed has fueled the rally in stocks and may also take note of elevated valuations.”

“The Organization for Development and Cooperation (OECD) published new growth forecasts which project a plunge of 11.5% in Britain’s GDP this year – worse than the eurozone.”

“Brexit talks remain deadlocked and with every day that passes, the chances that the UK falls back to World Trade Organization terms are growing. Hopes for intervention by leaders is probably helping the pound.”

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