GBP/USD: can it break the 1.31 barrier after FOMC outcome?

Currently, GBP/USD is trading at 1.3081, up 0.43% on the day, having posted a daily high at 1.3087 and low at 1.2999.

GBP/USD is bid on the back of the FOMC outcome. As expected, the Fed has left rates unchanged but said they will embark on balance sheet normalisation relatively soon while will reinvesting principal payments for the time being. The Fed noted that inflation is the 2% target for the near term 2% but expect rates to stabilise in medium term around the 2% target while risks to the economy remain roughly balanced.

Additional main takeaways:

• Fed says job gains have been solid, household spending and business fixed investment have continued to expand 
• Fed repeats near-term risks to the economy appear 'roughly balanced' but it is monitoring inflation developments closely 
• Fed vote in favor of policy was unanimous 

Comparison between July and June FOMC statements

GBP/USD levels

Analysts at Commerzbank explained that above 1.3126 will target the 1.3446/60 September 2016 high adding that key support remains 1.2775/50. However, analysts at Scotiabank argue that while the trend signals are positive, they rather think resistance in the low 1.31 area will cap gains near-term, adding, "loss of support in the low 1.30 region should see the GBP slip to 1.2940 support."