GBP/USD bid on the back of FOMC outcomes so far

Currently, GBP/USD is trading at 1.2268, up 0.97% on the day, having posted a daily high at 1.2286 and low at 1.2146.

The dollar has lost ground on the back of the FOMC statement while the Fed hiked rates by 25bps to 0.75%-1.00%. However, Fed futures price in only one more rate hike for 2017 and the longer-run on the dot plot was unchanged at 3%. 

• Fed's policy-setting committee did not flag any plan to accelerate the pace of monetary tightening - RTRS
• Fed's projections showed the economy growing by 2.1 percent in 2017
• FOMC's decisions regarding monetary policy implementation

There are now 14 Fed officials that see 4 rate hike sin 2017, up from 11 previous. However, there are other factors coming to the fore now the market has a sense from the Fed with the US debt ceiling and underlying worry and just today, the Atlanta Fed downgraded their projections for Q1 2017 growth again from 1.2% to below 1% at 0.9%.

Meanwhile, UK's PM May is expected to formally trigger Article 50. Some press reports suggested formal talks might not begin until June. UK data forced Sterling lower after today’s labor report.  "Data showed a steeper slowing of wage growth than had been anticipated, even though the claimant count fell (-11.3k in February after a 41.4k decline in January).  

The unemployment rate slipped to 4.7% (in three months through January), which is the lowest since 1975.  Average weekly earnings (three months, year-over-year through January) slowed to 2.2% from 2.6%.  The Bloomberg median forecast was for 2.4% increase.  It is the weakest wage growth since last April," explained analysts at Brown Brothers Harriman, (BBH). We have the Boe tomorrow and a Reuters poll results don't see a hike until 2019.  "Look for a unanimous decision tomorrow from the BOE's MPC to keep rates steady," - analysts at BBH

GBP/USD levels

"Sterling’s roller-coaster ride over the past few days has defined some very clear, short-term technical parameters for the market, explained analysts at Scotiabank." 

The analysts sighted a major resistance earlier at 1.2250 that has now been broken. 1.2372/1.2405 are the key upside targets on a continuation of the correction while 1.2110, as the double top neckline offers a major support. "A clear break of 1.2100/10 would suggest immediate risk to 1.1970 as the measured move target," suggested the same analysts at Scotiabank. 

US debt crisis to now come into focus?