GBP/USD holds steady post-FOMC, BoE on deck

• GBP/USD remains stuck near 1.3400 following an early-week decline.
• The Fed held interest rates steady, as markets broadly expected, with the requisite warnings about labor and inflation.
• The BoE is up next with its own interest rate decision; no change in UK rates is expected.

GBP/USD spun a circle on Wednesday, rising and falling through the Federal Reserve's (Fed) latest rate hold. Cable is caught in intraday consolidation near the 1.3400 handle, as Pound Sterling traders gear up for the Bank of England's (BoE) own interest rate decision, due early Thursday.

The Federal Reserve (Fed) hit the mark on Wednesday and kept interest rates on hold, as most investors expected. Traders are still pricing in around 50 basis points in interest rate cuts through the end of 2025, and the Federal Open Market Committee (FOMC) generally seems to agree with that assessment. However, Fed Chair Jerome Powell warned that ongoing policy uncertainty will keep the Fed in a rate-hold stance, and any rate cuts will be contingent on further improvement in labor and inflation data.

The Fed still sees an average of 50 basis points in interest rate cuts by the end of the year, following closely with what is priced in according to the CME's FedWatch Tool; however, ongoing trade policy uncertainty has pushed the spread of policymaker rate expectations wider, with some Fed personnel seeing higher year-end rates compared to the previous Summary of Economic Projections (SEP).

According to the CME's FedWatch Tool, rate traders slightly increased their already-standing bets of a first rate cut in September. Odds of a follow-up cut in October also increased, but odds of a delay in a second rate trim until December are still on the cards.

US President Donald Trump has gotten increasingly vocal about his wishlist to have the Fed start dropping interest rates, even as Fed policymakers hold in their "wait and see", with officials bracing for economic fallout from Trump's whipsaw tariff "strategy". The BoE is likewise expected to hold rates steady at 4.25% on Thursday, but no meaningful shifts in policy stances, or complaints about them, are expected.

GBP/USD price forecast

Cable's early-week decline puts GBP/USD on pace to take a fresh bear run at the 50-day Exponential Moving Average (EMA) near 1.3350, but only if bearish momentum continues. GBP/USD has tended to fade bearish snaps through 2025, with the pair still finding technical support from a rising trendline drawn from January's lows near 1.2100.

GBP/USD daily chart