GBP/USD spikes to 1.3045 and reverses sharply

GBP/USD jumped to 1.3045 after the FOMC decision but then reversed sharply falling to test daily lows.

The US central bank kept rates unchanged but said that the case for a rate hike has strengthened. Initially, the US dollar tumbled in the market, but then it reversed erasing all losses. GBP/USD dropped from 1.3045 and bottomed at 1.2950 after the beginning of Janet Yellen’s press conference.

The greenback continues to look for a direction in the market. GBP/USD continues to move sideways without a clear trend and still unable to hold above 1.3000.

Levels to watch

To the upside, resistance levels might be located at 1.3045 (daily high), 1.3090 (weekly high) and then 1.3160 (Sep 13 low).  On the opposite direction, support could be seen at 1.2945 (Sep 20 & 21 low), 1.2900 (psychological) and 1.2860 (Aug lows).