• GBP/USD is on the back foot as the US dollar rallies on hawkish FOMC.
• The FOMC minutes showed that the Federal Reserve officials expressed anxiety about inflation.

GBP was the strongest currency immediately after the release of the Federal Open Market Committee minutes, popping to 1.3107 before dropping to post minutes lows of 1.3056 when the US dollar finally broke to the upside. 

DXY, an index that measures the greenback vs a basket of six rival currencies, has run to the highest level for 2022 at 99.769 following the minutes that showed that the Federal Reserve officials expressed anxiety about inflation. The members have finalized plans to shrink bond holdings in an aggressive effort to curb rising prices. The Fed is preparing to shrink the $9tn balance sheet at a pace of roughly $95bn a month.

"All options reviewed by policymakers featured a more rapid pace of balance sheet runoff than in the 2017–19 episode," the minutes said. 

Many officials say one or more 50bps rate hikes may be warranted and many members sought a 50bps March hike if there was not a Ukraine war.

• Breaking: FOMC minutes say participants judged it appropriate to move policy towards neutral expeditiously

Meanwhile, some market commentators have started to speculate that the BoE may think twice about hiking interest rates beyond May. ''The BoE is expecting some labour market slack to open up going forward.  If this starts to happen it can be assumed that wage inflation will be repressed and that higher prices for food and energy will slow demand for goods with elastic demand. This will lessen the need for further rate rises,'' analysts at Rabobank argued.