FXStreet (Guatemala) – GBP/USD is currently trading on the bid at 1.5825 at time of writing with a high of 1.5831 and a low of 1.5624 as Yellen takes the stage and markets get behind a dovish rhetoric.
GBP/USD was initially offered on a strong dollar when the FOMC statement was released, but when looking further in to the facts and through the bullishness around economic projections, what it boils down to are the rates of interest rate increases coming in less than previously projected in March.
The median fed fund rate end of 2016 is now seen as 1.625% vs prev 1.875% and end of 2017 comes as 2.875% vs prev 3.125%. Yellen has stated in her press conference that inflation will probably stay lower for longer and that rate hikes will be gradual.
GBP/USD strong on UK fundamentals also
Earlier in the day, the Forbes was reported as foreseeing an increase in UK rates even before the 2% BoE target is reached which fuelled bids in to already bid pound on the day in London trade. Sterling was strong on wage growth numbers with weekly earnings out at 2.% vs 2.1% expected.
The BoE minutes showed however a 9-0 vote for rates to remain unchanged although 2 voters were on the fence this time around and maybe voting for a hike, adding support to the pound and weighing in on the cross.
(Market News Provided by FXstreet)