GBP/USD, steady as she goes ahead of FOMC

By FXstreet.com | Updated July 30, 2014 AAA

FXStreet (Guatemala) - GBP/USD is trading at 1.6948, down -0.10% on the day, having posted a daily high at 1.7005 and low at 1.6932.

GBP/USD is based and steady ahead of the FOMC and Fed decision coming up. The take-away from today’s FOMC will be, as suggested by Jane Foley, Senior Currency Strategist at Rabobank, whether Yellen is sufficiently concerned about the rise in core inflation to signal that rates could start to rise sooner than expected. “Currently, our expectation is that rates will not start to rise until the end of the year, but we are sensitive to the risk that a continued increase in core inflation could result in an earlier move”. She explained, in respect to QE, that they expect continued tapering to draw this programme to a close in October. “This view in the market has become so entrenched that the discussion about tapering is no longer a significant market mover”.

GBP/USD targets

Jane Foley went onto explain that speculation about the timing of rate hikes by the BoE and the Fed will be clear drivers for GBP/USD over the coming months. “On the expectation that the BoE moves first we see risk of a move above the 1.70 in a 3 to 9 mth view. However, on a 12 mth view we see cable moving lower”.

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