GBP/USD weakens after FOMC minutes as USD recovers

Spot falls to test daily lows after Fed’s minutes.
DXY Futures rebound sharply on hawkish tone from the FOMC.

Matías Salord FXStreet

The GBP/USD pair dropped to test daily lows at 1.4159 after the release of the FOMC minutes. Price fell from 1.4185 to 1.4159. So far it held above the lows and it was hovering around 1.470, flat for the day.

The greenback gained momentum after “hawkish” minutes according to many market analysts. All members saw further tightening likely warranted, with a gradual approach, repeating the tone of the previous meetings. The surprise came with comments from some members who mentioned that the economic outlook implies a steeper rise in rates over the next years than previously expected. Many of the FOMC members were more confident that inflation would reach the target in the coming months and would stabilize around that level.

The tone of the minutes boosted the US dollar, that trimmed losses across the board. With the recent retreat from the weekly highs it reached earlier today above 1.4200, Cable could post the first daily loss after a 3-day rally.

The correction could signal some correction or stabilization ahead. The dollar received a boost from the minutes but is not clear if the positive momentum will last.

Levels to watch

To the upside, GBP/USD continues to be unable to hold above 1.4200. If it manages to do so it could clear the way to more gains with potential targets at 1.4245 (Mar 26 high) and 1.4275. On the flip side, immediate support might lie at 1.4155/60 (daily low), 1.4095 and 1.4015.

Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

EUR/USD flat lines near 1.1800 as traders brace for US PPI release

The EUR/USD pair trades on a flat note near 1.1800 during the early Asian session on Friday. The pair steadies as softer Eurozone inflation offsets US tariff uncertainties. Traders await the preliminary reading of the Consumer Price Index from Germany on Friday for more clues about the pace of future policy easing. On the US front, the Producer Price Index report will be released.

GBP/USD threatens the 200-day SMA near 1.3440

GBP/USD rapidly leaves behind Wednesday’s strong advance, coming under heavy pressure and retesting the 1.3440 zone, where the critical 200-day SMA is located. Cable’s deep pullback follows the strong gains in the Greenback, while investors continue to pencil in a potential BoE rate cut in March.

Gold remains below $5,200 despite tariff jitters and geopolitical risks

Gold is seen consolidating in a range below the $5,200 mark during the Asian session on Friday amid mixed cues. Trade jitters, along with the risk of a potential US-Iran war, act as a tailwind for the safe-haven bullion. Meanwhile, the Fed's hawkish outlook keeps the US Dollar close to the monthly high and caps the non-yielding yellow metal. Nevertheless, the commodity remains on track to register gains for the fourth straight week, though the fundamental backdrop warrants some caution for bullish traders.