GBP/USD falls to daily lows as Fed raises rates as expected

GBP/USD fell sharply to hit fresh daily lows as the knee-jerk reaction to Fed’s decision to hike rates by 25 bps as widely expected.

The Federal Reserve raised the target for the fed funds to 0.5-0.75% on Wednesday while the dot plot revealed members forecast 2 to 3 hikes in 2017. Four of 17 officials are projecting a half-point during the course of 2017 while 6 forecast 75 basis points worth.

GBP/USD moved marginally higher and then plummeted, losing nearly 100 pips in a matter of seconds to bottom out at 1.2622. However, the pair continues to trade within its weekly range, presently at 1.2651, virtually unchanged on the day.

GBP/USD technical levels

In terms of technical levels, next resistances are seen at 1.2760 (100-day SMA), 1.2800 (psychological level) and 1.2859 (Oct 4 high). On the flip side, supports could be faced at 1.2565 (Dec 12 low),  1.2542 (20-day SMA) and 1.2500/1.2499 (psychological level/Dec 1 low).