GBP/USD turnaround to downside post balanced FOMC minutes

GBP/USD rallied on the back of the FOMC minutes that were overall balanced on a divided Fed on when to raise. 

GBPUSD has since moved lower on the back of US yields higher considering markets still anticipate a Fed hike in Dec, especially if Clinton gets in. 

The DXY remains strong while commodities remain soft. In respect of the minutes, essentially they were balanced and Yellen is still the main dove.  Several voters voted to raise rates soon, but there is a debate stirring in the Fed while the labour market remains too slack. A case for a rate hike would have to be overwhelming strong for them to move just days away from the US elections, so November is highly unlikely. However, there is also the concern that markets will lose confidence in the Fed if they don't do something soon. 

Meanwhile, the pound is the main focus in the FX space currently given all the hysteria around Brexit and PM May's conflicting announcements over the past several days. More on that here. 

GBP/USD levels

Recently, GBP/USD broke well below the 1.20 handle to levels that depend on what your EBS was showing while markets pulled bids during the flash crash. Some reported as low as 1.13 handle and 1.11 handle. For now we can look to the 1.21 handle as a key support zone and resistance at 1.2500. 

Analysts at Scotiabank offered a technical analysis on GBP/USD

Key Quotes:

"Cable has steadied in the short run, but the bear trend remains deeply entrenched and we see limited scope for GBP gains near-term..."

Meanwhile, Spot is presently trading at 1.2210, and next resistance can be seen at 1.2236 (Hourly 20 EMA), 1.2304 (Daily Classic R1), 1.2327 (Daily High), 1.2366 (Hourly 100 SMA) and 1.2378 (Yesterday's High).

Support below can be found at 1.2196 (Daily Classic PP), 1.2122 (Daily Open), 1.2122 (Monthly Low), 1.2122 (Weekly Low) and 1.2122 (Annual Low).

BoE: Markets scaled back expectations of further easing in November - Commerzbank