GBP/USD drops towards bull cycle support, 1.2350, on hawkish Fed hike

• GBP/USD has dropped on a stronger US Dollar and hawkish Fed hike.
• The bears are targeting the 1.2350s that guard the trendline support and 1.2250 then 1.2200 below there. 

GBP/USD is offered towards a key support line and trades around 1.2350 after the United States Federal Reserve raised rates by 50 basis points in what has been perceived as a hawkish hike. This is at the conclusion of the Federal Open Market Committee's two-day meeting on Wednesday. The Fed has signalled plans to keep lifting them next year to combat high inflation. Fed's chair Jerome Powell is currently speaking and fanning the flames of a higher terminal rate in his initial comments. More on Powell below. 

Meanwhile, the US Dollar, as measured by the DXY index, is high by 0.11% at the time of writing, making fresh gains on Powell's hawkish remarks. US Treasury yields have also rallied with the 10-year Treasury yield now printing a high of 3.56% on the day from 3.46% the low.

Fed key takeaways

• The Federal Reserve hikes 50 basis points, as expected
• Target Range stands At 4.25% - 4.50%.
• The vote was unanimous.
• The guidance in the statement repeats that: "The Committee anticipates that ongoing increases in the target range will be appropriate."

Watch Fed Chair Powell live

Fed chairman, Jerome Powell's press conference si underway and this can be watched in the live link above. 

Jerome Powell was expected to bring clarity to the interest rate decision and the statement for where the committee views the future of its inflation fight. He was expected to reiterate Fed will raise rates and keep them high until inflation shows concrete signs of coming back to the central bank’s 2% target. This would imply a higher terminal rate which would be expected to support US Treasury yields and the US Dollar, a headwind for the Pound Sterling.

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GBP/USD technical analysis

The bears are targeting the 1.2350s that guard the trendline support and 1.2250 then 1.2200 below there.