GBP/USD: a big mover ahead of the Fed

Currently, GBP/USD is trading at 1.2222, up 0.61% on the day, having posted a daily high at 1.2258 and low at 1.2146.

GBP/USD remains in recovery mode within the correction of the March1.25 handle supply down to test bull's commitments at 1.2108. Brexit concerns and uncertainty has been a weight on the pound in recent trade. However, there was a huge spike in early European trade as Asia handed over that was sold into and this time of the day for the pound has been busy for some unknown reason. More concrete, the data from the UK was conflicting for sterling traders with softer wages vs a stronger jobs report, but all in all, wages are a real concern for the BoE and should continue to pressure the pound. 

US CPI: Inflation remains on track for the Fed - Wells Fargo

Next up, the FOMC will in focus as we await the outcome of their two-day meeting where markets are expecting a 25bp hike, especially after today's 'no-drama-CPI' data that came in line with expectations and should seal the deal for the Fed today. The question is whether the hike will be dovish or hawkish? If the Fed do not hike, there could be huge volatility and a reason for them, not hiking could be as a result of wages vs inflation - today's CPI data did show that real hourly earnings arrived at 0.0% vs 0.1% prior m/m which is a potential spanner in the works for the Fed.

GBP/USD levels

Analysts at Commerzbank explained that GBP/USD's near term outlook is negative: "Sterling’s erosion of the 78.6% retracement at 1.2142, leaves the market on the defensive. This is considered to be the last defense for the 1.1988 January low," argued the analysts, adding, "The market stays directly offered below the 55 and 200-day ma at 1.2372/1.2405. We target 1.1988/80 recent low and the bottom of the 5-month range at 1.1920."

Moving on from the Fed: