GBP/USD 65 pip volatility on hawkish dot-plot focus turns to Fed’s Powell press conference

• Fed keeps interest rates unchanged.
• Moderation in the asset purchases program “may soon be warranted.”
• GBP/USD is volatile on the FOMC statement.

The GBP/USD dipped to around 1.3620 on the back of half (9) of the Federal Reserve members, seeing an interest rate hike in 2022, compared to seven members on June’s report. However, as investors dissected the statement, the GBP/USD bounced off the lows, is trading around 1.3670, nearby the 1.3700 figure.

Key takeaways from Summary of Economic Projections

"Fed policymakers see a first rate hike in 2022: median forecast in Summary of Economic Projections."

"Half of Fed policymakers see lift-off in fed funds rate from zero in 2022, vs. 7 of 18 in June forecast; all but one see liftoff by end-2023 (vs. 13 in June)."

"Fed's median view of fed funds rate at end-2022 0.3% (prev 0.1%)."

"Fed's median view of fed funds rate at end-2023 1.0% (prev 0.6%)."

"Fed's median view of fed funds rate at end-2024 1.8%."

"Fed's median view of fed funds rate in longer run 2.5% (prev 2.5%)."

"Fed sees US GDP growing 5.9% in 2021 (prev 7.0%), 3.8% in 2022, 2.5% in 2023; 2.0% in 2024; median long-run forecast at 1.8% (prev 1.8%)."

"Fed sees year-end US jobless rate at 4.8% in 2021 (prev 4.5%), 3.8% in 2022, 3.5% in 2023; 3.5% in 2024; median long-run forecast at 4.0% (prev 4.0%)."

"Fed sees PCE inflation at 4.2% in 2021 (prev 3.4%), 2.2% in 2022, 2.2% in 2023; 2.1% in 2024."

"Fed sees Core PCE inflation at 3.7% in 2021 (prev 3.0%), 2.3% in 2022, 2.2% in 2023; 2.1% in 2024."

"Fed policymakers see inflation running higher than 2% goal through end-2024: median forecast in Summary of Economic Projections."

Next is the Fed’s Chairman Jerome Powell press conference. Firstly will read the monetary policy statement followed by the Q&A session.