GBP/USD stuck at 1.25 on faster Fed rate hikes talk

GBP/USD failed to retake 1.25 handle in Asia on heightened prospects of faster Fed rate hikes in 2017.

St. Louis President James Bullard told the WSJ that the bank should consider shrinking its balance sheet and may have to raise rates more than once in 2017. Earlier this year, Bullard was rooting for just one rate hike in 2017.

Meanwhile, Richmond Fed President Jeffrey Lacker said the Fed may need to raise rates more than three times in 2017.

Fed’s ‘dot plot’ released last week showed the policy makers see scope for three rate hikes next year.

Minor bout of weakness in the US dollar in Asia, helped the GBP/USD recover from the Asian session low of 1.2471, however, Fed outlook made sure the spot remains stuck at 1.25 handle.

GBP/USD Technical Levels

A break above 1.25 (zero figure) would open the door to 1.2522 (5-DMA) and then to 1.2574 (10-DMA). On the other hand, a breakdown of support at 1.2471 (session low) would expose support  at 1.2414 (50-DMA) and 1.2376 (Dec 15 low).