The markets around the globe are experiencing one of the fastest shocks after the failure of Silicon Valley Bank. The Fed was on the verge of increasing the rate hike speed to 50 basis points and pushing it over to 5%. Now, expectations have fallen off the edge, with some fund managers even pointing to rate cuts as close as this month. The pricing in the markets shows around a 70% probability of a 25-point hike, with just one hike remaining, followed by multiple rate cuts – a big turnaround in only one week. The 2-year yield 3-day fall was the biggest since the 1980s. Of course, the biggest loser in these developments was the dollar index. With the sharp fall of the dollar, major currencies like GBP, EUR, and JPY gained value over the USD at a fast pace.
GBPUSD received a good boost from the 200-day moving average and the 1.18 support level. If today’s CPI doesn’t shock the markets with an increase or if any FED member makes a hawkish statement, GBPUSD might continue to rise in the short term. The key resistances to follow are 1.22 – 1.2385 and 1.25. As for downward moves, the 50-day moving average might hold the decreases for now, but a clear breakdown could bring prices to the 1.20 or 1.1930 support levels. The main support over the medium term might be at 1.18.
