GBP/USD remains steady near 1.3400 after an early-week drop. The Federal Reserve held interest rates unchanged on Wednesday, as widely expected. However, Fed Chair Jerome Powell cautioned that future rate cuts will depend on improvements in labor and inflation data. The market anticipates about 50 basis points of rate cuts by the end of 2025, a view that the Fed generally shares.
Traders are pricing in a possible rate cut as early as September, with another likely in October, though some expect the second cut could be delayed until December. Meanwhile, uncertainty around trade policy has caused some divergence in Fed officials’ rate forecasts.
US President Donald Trump has been pushing for the Fed to lower rates sooner, even as officials remain cautious due to potential economic risks from his tariff policies.
Next on the calendar is the Bank of England’s interest rate decision, expected on Thursday. The BoE is likely to keep rates steady at 4.25%, with no major policy changes anticipated.
After its early-week decline, GBP/USD is poised to test support near the 50-day Exponential Moving Average (EMA) around 1.3350, but only if bearish momentum persists. The pair has shown resilience recently, maintaining support along a rising trendline from January lows near 1.2100.
