GBP/USD remains strong despite aggressive FOMC Minutes

• GBP/USD is trading near 1.2740, after reaching a daily high of 1.2766 in the previous session.
• The FOMC minutes showed that members were very concerned about the upside risks to inflation.
• The Pound remains strong after the UK July inflation figures were reported during the European session.

Following the release of the July Federal Open Market Committee (FOMC) Minutes, GBP/USD was little changed. Despite FOMC members being hawkish, the British Pound continues to trade strongly amid UK inflation numbers and aggressive bets from the Bank of England.

The Minutes showed that members were concerned about upside risks to inflation due to a hot labor market and left the door open for another hike, at least for this cycle. The immediate reaction was a slight move higher in the US DXY index and US Treasury yields, but GBP/USD held firm.

Everything will depend on the data that is arriving. In general, the US economy shows strong economic activity and a solid labor market, while inflation recedes. Before the September meeting, the Federal Reserve (Fed) will receive an additional report on non-farm payrolls and the Consumer Price Index (CPI), as well as intermediate economic activity figures for August. At the moment, according to the CME’s FedWatch tool, markets are betting that the Fed will pause in September and forecast a 40% chance of a 25 basis point hike in November.

GBP/USD Levels to Watch

According to the daily chart, the technical outlook for GBP/USD remains neutral to bullish as the bulls are picking up ground. Sloping upwards below its midline, the RSI suggests a possible increase in buying pressure, while the MACD shows lower red bars. On the other hand, the pair is above the 20-day SMA, below the 100-day SMA, but above the 200-day SMA, indicating that the bulls continue to have the opportunity. upper hand in a bigger picture.

Support levels: 1.2730, 1.2715, 1.2700.

Resistance levels: 1.2760, 1.2780, 1.2800.

GBP/USD Daily Chart