- Pound holds onto gains across the board ahead of the FOMC statement.
- US dollar moving sideways, DXY flat around 90.50.
The GBP/USD peaked after the beginning of the American session at 1.4132 and quickly pulled back to the 1.4120/1.4100 range. It is moving sideways in the range ahead of the Fed’s decision.
GBP holds to gains ahead of FOMC
At 18:00 GMT, the US central bank will announce its decision on monetary policy. No changes are expected. Market participants will be more interested in the economic projection of the FOMC staff and on mentions or signs about tapering asset purchases.
The outcome of the FOMC meeting will likely have a large impact on markets, including the dollar and the cable. As traders await the Fed and Powell press conference, equity prices in Wall Street and metals are moving sideways (18:30 GMT).
Among majors, the pound is among the top performers so far on Wednesday. It gained momentum after inflation data from the UK that showed higher-than-expected numbers. “The BOE (Bank of England) has long said that a temporary spike in inflation would arrive this year and here we are. While BOE tightening expectations have picked up recently as the recovery picks up steam, today’s data did little to change the rates outlook. The short sterling strip still shows the first hike largely priced in by mid-2022 and fully priced in by Q3 22, while gilt yields are little changed on the day”, explained analysts at Brown Brothers Harriman.