GBP/USD hits 6-day highs after FOMC minutes, still unable to consolidate above 1.3220

The US dollar dropped across the board after the release of the minutes from the latest FOMC meeting. GBP/USD climbed to 1.3227, reaching the highest level since October 5 but it failed to extend the rally. 

At the moment of writing is trading at 1.3215, marginally above the level it had before the minutes. Momentum is still bullish but cable needs to break and consolidate on top of 1.3220 in order to open the doors to further gains. Price remains trapped in the daily range, between 1.3175 and 1.3220. 

According to the minutes, many Fed officials saw another rate hike warranted this year while at the same time, were concerned about low-inflation being not transitory. Rate hike expectations for December rose marginally (they were already at high levels before the minutes - above 85% -) according to the CME Fed Watch Tool. However, odds for rate hikes next year dropped modestly. US bonds posted minor gains and pushed the greenback to the downside.  

US CPI data will be released on Friday. After today’s comments from Fed’s Evans and also following the minutes, inflation readings could become more important. 

FOMC Minutes: Many Fed officials saw another rate hike warranted this year

Fed’s Evans: Premature to make call on December hike - BBG TV

Technical levels 

Cable holds a bullish tone and is challenging a key resistance. A clear break above 1.3220 could target 1.3285/90 (Oct 4 high). On the downside, a slide back under 1.3200 would expose the lower bound of today’s range at 1.3175; below the next support might be seen at 1.3130 (Oct 10 low).