The British Pound lost ground against the US Dollar on Wednesday, with GBP/USD slipping six-tenths of a percent as risk sentiment weakened and investors sought safety in the Greenback. The Federal Reserve’s latest rate decision kept US interest rates unchanged as expected, but a firmly cautious tone from policymakers spurred renewed demand for the Dollar.
Fed Chair Jerome Powell reiterated the central bank’s “wait-and-see” stance during his post-meeting remarks, warning that persistent US trade tariffs could obstruct progress toward the Fed’s inflation and employment goals. While tariffs imposed under the Trump administration have dampened consumer and business confidence, the relative resilience of core economic indicators has limited the case for immediate policy shifts, Powell noted.
The focus now shifts to the Bank of England (BoE), which is widely anticipated to cut its key rate by 25 basis points in Thursday’s meeting—marking its fourth rate reduction since the peak of the tightening cycle in 2023. The BoE’s Monetary Policy Committee (MPC) is expected to vote overwhelmingly in favor of the cut, with a projected 9-1 split, as policymakers look to support a slowing UK economy facing both domestic and global headwinds.
GBP/USD Price Outlook:
The Pound dropped back below the psychologically significant 1.3300 level in midweek trade, as Cable’s recent bullish momentum ran into profit-taking and broader Dollar strength. Despite the pullback, GBP/USD remains elevated near multi-year highs north of 1.3400, suggesting underlying strength in the pair remains intact—barring a surprise from the BoE.
Market participants will be watching closely for the tone of Thursday’s BoE statement, with any dovish surprises likely to fuel additional downside in Sterling.
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