The GBP/USD pair traded within a tight 40-pip range on Wednesday, showing mild volatility after the Federal Reserve decided to keep interest rates unchanged. The Fed maintained the target range at 5.25%–5.50%, signaling confidence in the U.S. economy’s steady growth and strong labor market. At the time of writing, GBP/USD hovered near 1.3450, gaining about 0.20%, as traders awaited Federal Reserve Chair Jerome Powell’s press conference for further guidance on future rate moves.
The Federal Open Market Committee (FOMC) also confirmed its plan to continue reducing Treasury holdings. Meanwhile, the June Summary of Economic Projections (SEP) revealed a slightly weaker outlook for 2025 GDP growth, which was lowered to 1.4% from 1.7% in March. The unemployment rate forecast edged up from 4.4% to 4.5%, while core Personal Consumption Expenditures (PCE) inflation is now expected to rise to 3.1% from the previous 2.8%.
Despite these changes, the median forecast for the federal funds rate in 2025 remained steady at 3.9%, indicating that Fed officials still expect two rate cuts of 25 basis points each during the year.
GBP/USD currently trades between 1.3450 and 1.3500, with key resistance at the 20-day simple moving average (SMA) around 1.3535. If Powell’s remarks adopt a dovish tone, the pair could push higher toward 1.3600, with the yearly peak at 1.3631 as a potential target. On the other hand, a more hawkish stance could send the pair below 1.3400, opening the way for a test of the 50-day SMA at 1.3376 and then 1.3350.
