The FOMC Meeting Minutes are shaping up to be one of the major fundamental updates for this week, not only because it is a relatively quiet trading week but also due to the volatility that the market has seen in rate expectations since the meeting on September 16th. Odds that the Fed would hike rates again at the October meeting have jumped up to around 70% shortly after the meeting to now be placed around the 25% level.
The initial reaction from the meeting, and press conference was that the Fed had turned more hawkish, however data, in the form of Core PCE Price Index numbers and Friday’s Non-Farm Payrolls update, as well as Fed commentary have turned to a much less hawkish scenario. If the minutes back the aftermath of the meeting, we could see expectations push back further towards a hike in a couple of weeks, whereas, if they are more cautious and promote a ‘wait and see’ approach with regard to data, we could see a hold, all but locked in by the market.
Cable is again sitting at good levels for trading on the release. It is currently trading just above strong support levels and traders will look to leverage off those if we do get a strong indication from the minutes. Bulls will use a less hawkish outlook to get into long positions and use the support levels to stop out, whereas GBPUSD bears will be looking for a break trade though the support levels if the minutes indicate that the committee is factoring in at least one more hike this year.
Resistance 2: 1.3441 – 200 Day Moving Average
Resistance 1: 1.3413 – Trendline Resistance
Support 1: 1.3177 – Oct Low and Trendline Support
Support 2: 1.3137 – 2026 Low
