December 4, 2022

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GBP/USD sellers eye key support on break below 1.4000 after the FOMC

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GBP/USD slumped heavily yesterday as the dollar gained across the board

GBP/USD D1 17-06

Cable price action had already been on the ropes in the past few days leading to the FOMC decision but yesterday may be the straw that breaks the camel’s back.

From a technical perspective, buyers did hang on for a while at 1.4100 but now with a break back below 1.4000, there isn’t much in the way of a move to the 100-day moving average (red line) @ 1.3933 next.

That level was defended by buyers back in April and will likely be called into question once again as we look towards the weekend.

For now, the post-FOMC reverberations are continuing and with the dollar finally breaking out of consolidation range for most pairs in the past month, these moves should play out for a while yet – until we get to the next set of key levels that is.

Looking at the bigger picture, it will come down to how much does the market see yesterday as a major point in the timeline towards the Fed tightening policy.

If so, then cable might have some catching up to do back to the downside – assuming the Fed normalises policy much faster than anticipated – as the pair looks rather stretched in terms of positioning; similarly for the dollar on the other end of the scale.
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