GBP/USD bulls take on 1.3150 critical level

• GBP/USD rallies to 1.3147 highs post Fed and market's turnaround. 
• Bulls back in control despite Fed's hawkish statement. 

GBP/USD is up over 0.8% at the time of writing in the aftermath of the Federal Reserve that had something for both the bulls and the bears from start to finish. Initially, the US dollar rallied on the rate decision and statement. GBP/USD dropped to 1.3042 after the Fed announced it had hiked 25 basis points in the Federal Funds Rate. 

In the statement, it read that "inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures.'' The Fed statement also noted that the Ukraine war could lead to higher inflation and slower Gross Domestic Product.

Most Fed officials see as many as seven rate increases in 2022. The Fed explained that the economic activity and employment indicators have continued to gain strength, jobs gains have been sold in recent months, and the unemployment rate has fallen notably.

"The committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run," the FOMC said. "With appropriate firming in the stance of monetary policy, the committee expects inflation to return to its 2 percent objective and the labor market to remain strong," it added.

Separately, the Fed's dot is also pointing to a consensus funds rate of 1.9% by the end of this year. It sees three more increases in 2023 and then none the following year, pencilling in rate hikes at every remaining meeting this year. 

However, the hawkishness was erased in comments during the Fed chairman's presser. Jerome Powell said rate rises will depend on inflation and economic data. He has stated that the Fed is looking for the month on month inflation to come down. This helped US stocks to rebound and weighed on the greenback, lifting cable higher again.