GBP/USD backslides ahead of BoE rate call

• GBP/USD fell 0.6% on Wednesday, easing back into near-term lows.
• The Fed held rates steady, as expected, but tariff concerns are raising cautionary flags.
• The BoE is expected to deliver a rate cut on Thursday.

GBP/USD fell back on Wednesday, shedding six-tenths of one percent as markets kept one foot firmly planted in the safe haven Greenback. The Federal Reserve (Fed) kept rates on hold, as markets broadly expected, but Fed policymakers remaining firmly stuck in a "wait-and-see" approach hampered risk appetite during the midweek market session. The Bank of England (BoE) is up next with its own rate call on Thursday, and is widely expected to deliver another quarter-point rate trim.

Forex Today: All eyes are on the Bank of England

Market sentiment declined after Fed Chair Jerome Powell's press conference. He stated that US trade tariffs could hinder Fed goals for inflation and employment this year. Powell warned that ongoing policy instability may compel the Fed to adopt a 'wait-and-see' approach to interest rates. Although consumer and business sentiment were severely impacted by the Trump administration's tariffs, the lack of significant negative economic data complicates the Fed's justification for immediate interest rate changes.

Fed's Powell: Right thing to do is await further clarity

The BoE's upcoming Thursday rate call is widely expected to be another quarter-point cut, the UK bank's fourth cut since hitting peak rates in 2023. The BoE's Moentary Policy Committee (MPC) is expected to vote nine-to-one in favor of delivering another rate cut in an effort to help bolster the wobbling UK economy.

GBP/USD price forecast

GBP/USD stumbled, falling back below the 1.3300 major price handle and keeping price action caught in a near-term consolidation trap. Despite intraday weakness, Cable remains firmly entrenched on the high side of recent momentum, with the pair trading close to multi-year highs north of 1.3400.

GBP/USD daily chart