GBP/USD Declines Amid Fed Rate Cut
The GBP/USD exchange rate saw a notable drop during the US market session on Wednesday, reaching the 200-day exponential moving average (EMA), which indicates a deeper bearish trend for Cable. It’s striking that the GBP/USD pair has closed lower in eight out of the last nine trading days, with the British Pound (GBP) losing around 2.46% against the US Dollar (USD).
The US Federal Reserve (Fed) made a widely anticipated cut to its key policy rate, lowering it by 25 basis points. However, investors were somewhat taken aback by Chairman Jerome Powell’s cautious tone during his press conference. Prior to this week’s decision, there was considerable confidence that a third rate cut might occur in December, following one in October. It seems now that expectations have shifted, suggesting that the Fed might not consider another cut until the latter half of 2025.
Powell indicated that the Fed could adopt a wait-and-see approach, mainly due to the ongoing US government shutdown that has left many official data sets unavailable. This uncertainty has caused traders to become less optimistic about a potential December rate cut, with current projections showing less than a 33% probability of such an event happening on December 10. Hopes for any further cut have now been pushed back to January 2026.
