13 November 2023, GBP/USD
GBPUSD trading plan:
Fed Chairman Jerome Powell tried to "undo" the situation after the rate decision, saying that the Fed was "not sure it has done enough to bring down inflation" and would tighten further, if necessary, although he repeated the mantra that it would "move cautiously". Powell realized that he had overdone it, not for the first time. Powell emphasized the importance of the Fed's independence, saying: "For me, that's number one on the list...". This is not about inflation or unemployment, but about the potential conflict between monetary policy and politically influenced fiscal policy. Such a conflict could potentially lead politicians to significantly reduce the Fed's independence. The Fed understands this and its "act cautiously" approach grows out of this situation; after the "inflation is temporary" fiasco, any mistakes are scary, making central banks more dependent on market conditions. When asked about fiscal policy, Powell simply dodged the question, essentially saying that they don't comment on that, which is funny considering that just a few weeks ago he was talking about fiscal policy. There will have to be a compromise between meeting inflation targets and maintaining independence.
Investment idea: sell 1.2259 and take profit 1.2195.
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