The GBP/USD pair saw an uptick on Wednesday after the Federal Reserve opted to cut interest rates, with a vote that favored the decision 9-3. Interestingly, two members chose to maintain the rates, whereas Fed Director Stephen Milan voted for a more substantial cut of 50 basis points. As of now, the pair is trading at approximately 1.3350, reflecting a gain of 0.46%.
Fed’s split vote prompts GBP/USD increase, traders eye crucial levels
The Federal Open Market Committee (FOMC) displayed a notable division with its 9-3 vote, supporting a 50 basis point cut by Governor Stephen Milan, while Governors Jeffrey Schmidt and Austan Goolsby leaned towards keeping rates steady.
Looking ahead, many officials anticipate the federal funds rate hovering near 3.4% next year, with the median prediction showing just a single 25 basis point reduction in 2026, as indicated in the latest Summary Economic Projections (SEP) accompanied by an updated dot plot.
The dot plot reveals that out of 19 Fed members, 12 expect the federal funds rate to dip below 3.50% next year. Of those, eight foresee rates around 3% to 3.50%, two predict around 2.75% to 3%, while one estimates between 2.50% and 2.75%. Milan stands out with a forecast of 2% to 2.25%.
GBP/USD response – hourly analysis
The GBP/USD continued its upward trajectory, bouncing back from 1.3326 to hit 1.3360. However, it pulled back a bit before Fed Chair Jerome Powell’s press conference. If it surpasses that day’s peak, it could target the December 4th high of 1.3385, potentially moving towards 1.3400. Conversely, if the pair drops below 1.3320, the focus would shift to 1.3250 and the day’s low at 1.3295.
