GBP/USD Soars as Powell's Dovish Tone Sparks Bullish Momentum
In a surprising turn of events, the GBP/USD experienced a robust bullish rally on Thursday, surging above the 1.2600 level and reaching 1.2660. This surge followed the Federal Reserve's (Fed) decision to keep interest rates unchanged, coupled with Chairman Jerome Powell's unexpectedly dovish statements during the post-meeting press conference.
While the decision to maintain the interest rate at 5.25%-5.5% was largely anticipated, the real market-moving revelation came from the revised dot plot. The dot plot hinted at a potential 75 basis points rate reduction in 2024, signaling the Fed's cautious approach to avoid prolonged periods of high interest rates. Powell's emphasis on this strategy triggered a rally in equity markets and a sharp decline in both the US Dollar Index and Treasury bond yields.
From a technical standpoint, the GBP/USD exhibited resilience and a strong bullish rebound, finding support at the 61.8% Fibonacci level. The breakthrough key resistance levels suggests the potential for a bullish continuation. Traders are now closely monitoring for further upside, expecting the GBP/USD to sustain its growth momentum amid the evolving dynamics in the US monetary policy landscape.
Our preference
Long positions above 1.2500 with targets at 1.2735 & 1.2850 in extension.
In a surprising turn of events, the GBP/USD experienced a robust bullish rally on Thursday, surging above the 1.2600 level and reaching 1.2660. This surge followed the Federal Reserve's (Fed) decision to keep interest rates unchanged, coupled with Chairman Jerome Powell's unexpectedly dovish statements during the post-meeting press conference.
While the decision to maintain the interest rate at 5.25%-5.5% was largely anticipated, the real market-moving revelation came from the revised dot plot. The dot plot hinted at a potential 75 basis points rate reduction in 2024, signaling the Fed's cautious approach to avoid prolonged periods of high interest rates. Powell's emphasis on this strategy triggered a rally in equity markets and a sharp decline in both the US Dollar Index and Treasury bond yields.
From a technical standpoint, the GBP/USD exhibited resilience and a strong bullish rebound, finding support at the 61.8% Fibonacci level. The breakthrough key resistance levels suggests the potential for a bullish continuation. Traders are now closely monitoring for further upside, expecting the GBP/USD to sustain its growth momentum amid the evolving dynamics in the US monetary policy landscape.
Our preference
Long positions above 1.2500 with targets at 1.2735 & 1.2850 in extension.
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