ING: Negative reaction of the dollar to the Fed's decision will push GBPUSD towards 1.25

The rate of inflation in the UK has started to decline, however, market participants don’t seem to be interested in it. According to ING economists, the pound/dollar pair is likely to change on the background of the U.S. Federal Reserve's statements.

After the publication of November's data, it became clear that the YoY CPI was lower than forecasted in October, 10.7% instead of 11.1%.

Some say the pound's near-total lack of reaction to the data was expected, given the continued wait-and-see attitude ahead of today's Federal Open Market Committee (FOMC) meeting. It’s also noted that the inflation data has little impact on the outcome of tomorrow's Bank of England meeting.

A correction below 1.23 is expected. Nevertheless, nobody denies the significant risks of the dollar's negative reaction. In this case, the growth to 1.25 before the Christmas break is possible.