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GBP/USD trading - Fed lowered the expectations - 16 Mar 2017

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GBP/USD trading chart 16 Mar 2017
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Yesterday, the markets received good data before the Fed meeting.

In the UK, the number of jobless claims fell by 11.3%, the unemployment rate decreased from 4.8% to 4.7%. The average earning index + bonus increased by 2.2% in January. Also, the delay in launching the process of the Brexit is still optimistically perceived by the market. This allowed the Cable to add 60 points before the Fed meeting.

The US also provided good data before the Fed meeting

In February, the retail sales increased by 0.1%, the core sales by 0.2%. The Core CPI added 0.2%. The business inventories increased by 0.3%. The NAHB housing market index increased from 65 to 71 in March.

The Fed raised the rate by 0.25% to 1.00%. Since the markets were fully prepared for this, the pound was bought against the dollar and added 140 points. The Fed's monetary policy committee slightly raised the forecast for the economy, but, most importantly, lowered the average expectation of committee members at the rate for the current year.

Thus, the thesis of the accompanying statement about the rate hikes below the level of long-term expectations can be considered objective. And we are confident that the Fed will raise the rate no more than two times this year. We also continue to believe that the main reason for the rate increasing is political.

Now, under favorable circumstances, we expect the next rate increase not earlier than in September. Yesterday the dynamics of all the markets was quite active we expect the trend to continue for several more days.

How we trade binary?

We would buy Call options if the pair rises and fixes above 1.2296. If in the first half of the day, the pair GBP/USD declines, we would buy Call options after the rebound from 1.2235. We would buy Put options if the GBP/USD falls below 1.2235.

Asset: GBP/USD
Direction: Call
Target price: 1.2296
Expiry time: 21:00 GMT

Disclaimer: The article is written for informative purposes only and it is not financial advice. The author does not have any position in the currency pairs mentioned, and no plans to initiate a position. He wrote the article himself and expressed his own opinions. He has no business nor personal relationships with any mentioned government entities or stocks. Readers should not treat any opinion expressed by the author as a specific inducement to make a particular trade or follow a particular strategy, but only as an expression of his opinion.

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