GBP/USD resumes bearish ways as Fed rate cut bolsters Greenback

• GBP/USD fell another 0.6% on Wednesday as USD demand continues to climb.
• The Fed may not be as eager to deliver three straight rate cuts as many initially expected.
• With official data sources running dry amid the US government shutdown, Fed caution is on the rise.

GBP/USD fell steeply during Wednesday's American market session, extending a decline through the 200-day Exponential Moving Average (EMA) and pushing Cable positioning even further into bear country. GBP/USD has closed in the red for eight of the last nine consecutive trading days, pushing the Pound Sterling (GBP) into a -2.46% swing against the US Dollar (USD) top-to-bottom.

The Federal Reserve (Fed) cut its main reference rate by another 25 basis points on Wednesday, as many market participants expected. What caught investors off guard, however, was Fed Chair Jerome Powell's press conference that struck an even more cautious note than usual. Before this week's Fed interest rate decision, investors were confident that an October rate cut would be followed up by a third straight rate cut in December. Now, interest rate cuts through the second half of 2025 may very well be a two-and-done.

Citing a general lack of official datasets, thanks to the ongoing US government shutdown, Fed head Powell cautioned that the Fed may be forced to adopt a wait-and-see approach once again. With the potential for another data cycle with no meaningful decision on rate cuts from the Fed, investors have pulled back sharply from their hopes for a third rate cut in December. At the time of writing, rate traders are pricing in odds of a third rate trim on December 10 at less than 33%, with hopes for another rate cut pushed out to January of 2026.

GBP/USD daily chart