The Fed is expected to raise interest rates by 75 basis points, but that’s the statement people are paying most attention to. Looking at GBP/USD we can see that we tried to move a little higher at the beginning, but we also struggled at the 1.16 level. The 1.16 level is an area where we have seen noise before, so it makes sense that we would see it as a small barrier. Now that we have seen this, it makes sense that we may need to focus on the 1.15 level. Advertisement ImageStrong Dollar Swings Make Very Profitable Trades Move Now! Remember that the Fed comes into the picture next week with their monetary policy meeting, and we’re likely to see a lot of volatility based on that. The Fed is expected to raise interest rates by 75 basis points, but that’s the statement people are paying most attention to. If the statement remains very dovish, it will be difficult for the US dollar to do anything but rise. I think it’s very likely right now that we’re a little overextended, so I think we have a situation where the market may need to correct. Awaiting Fed Decision It’s been a very nice rally over the last few rentals, basically an exceptionally oversold space. The UK fiscal crisis is much less dangerous than before, so it makes some sense that the pound has conquered some territory, but in the long run the downside makes a lot of sense. After all, the UK has things like energy to worry about this winter, so it’s hard to see the economy really recovering. In fact, the Bank of England probably needs to do some sort of e-journaling operation. If we rally from here, the 1.20 level will be the next big hurdle and above that I think you need to start thinking about a trend reversal because we can threaten the 200 day EMA. However, it would take a lot of momentum to make it happen, and it would probably have something to do with the Fed changing its overall stance on Wednesday, which I just don’t see happening yet.