Oil Drops Sharply

The Federal Open Market Committee held its interest rate target unchanged in the 0.25% to 0.5% range. However, the FOMC hinted to an interest rate hike later this year; possibly as early as September, as it said, "Near-term risks to the economic outlook have diminished.”

The FOMC noted that the labor market has "strengthened" and said other indicators were pointing to growth. The U.S dollar index reached a high of 97.60 before declining by 40 pips to trade below 96.80.

On Wednesday, U.S crude futures tumbled 3%, hitting a three-month low after the U.S. government reported a surprise increase in crude and gasoline inventories. U.S. commercial crude in storage rose by 1.7 million barrels in the last week, compared with expectations of a decline of $2.3 million barrels. The U.S crude fell to $41.60 before recovering to $42.

The British economy grew by 0.6% in the second quarter of the year, as economic growth accelerated in the run-up to the vote to leave the EU.

The UK economy grew by 0.6% in the second quarter of the year, up from 0.4% in the first three months of 2016. Data only included figures up to one week following the EU referendum.

On the other side, the UK Retail Sales fell sharply between June 28 and July 14, the lowest level in more than 4 years. From a technical point of view, Cable could decline to $1.30 soon.

Gold touched $1,340 and could hit new high levels during the course of the day. On the other hand, declines will be limited to $1,330.

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