GBP/USD advances after the Fed discussed a possible pause in its tightening cycle

• GBP/USD remains positive, aiming to test the 1.2500 figure.
• The FOMC Minutes showed that participants were expecting a 50 basis point hike, but the banking crisis put a possible pause on the table.
• Inflation in the US fell, but the core CPI remained at the levels of the previous month.

The pair GBP/USD advances after the publication of the Minutes of the last meeting of the Open Market Committee of the US Federal Reserve (FOMC), which show that officials discussed a possible pause in their tightening campaign. Therefore, GBP/USD is trading at 1.2489 after hitting a daily low of 1.2398.

FOMC Minutes preliminarily showed a pause and a 50 basis point rate hike

At the Fed’s last policy meeting, officials considered a pause following the failure of two regional banks, fearing further tightening could trigger financial stress. However, these participants and others agreed that the actions taken by the Fed calmed concerns in the banking sector. The measures taken by the Fed were similar to those of the Bank of England (BoE) after the bond turmoil due to the mini-budget of ex-minister Liz Truss, given the background, which supported a 25 basis point rate hike by the Fed at its last meeting.

Participants commented that inflation remains above the 2% target and that inflationary pressures were “declining fast enough to bring inflation back to 2% over time.” Some Fed members said they considered a 50-point increase. basics if there was no banking crisis. Furthermore, Fed officials noted “inflation was still too high and the labor market was still too tight.”

Earlier, a report on US inflation revealed that the headline CPI fell from 6% in February to 5% annually. However, core inflation, which excludes food and energy, remained unchanged at 5.6% yoy.

GBP/USD Technical Analysis

After breaking four straight days of losses on Tuesday, the GBP/USD pair is poised to test the 1.2500 area in the short term. Although the 100 day EMA remains below the 200 day EMA, it is about to cross it, reinforcing the bullish bias in the GBP. With a decisive break of 1.2500, GBP/USD could rally and test the June 9 high at 1.2599 before breaking above 1.2600.