- GBP/USD remains stable after the Fed maintains interest rates between 5.25% and 5.50%.
- The Fed’s latest Economic Projections highlight slow GDP growth for 2025 and a core inflation rate at 3.1%.
- Traders are anticipating Powell’s press conference for further insights on interest rates.
The GBP/USD pair traded within a modest 40 pip range on Wednesday, displaying only slight fluctuations. The Federal Reserve’s decision to keep rates steady suggests the possibility of two interest rate cuts later this year. At present, the pair hovers around 1.3450, showing a small gain of 0.20%.
After the Fed’s decision, GBP trades are concentrated around 1.3450, with expectations of two rate cuts this year.
As anticipated, the Federal Reserve did not change its target range for the federal funds rate, keeping it at 4.25% to 4.50%. The Federal Open Market Committee reiterated its focus on managing risks associated with its dual mandate and confirmed plans to further reduce Treasury holdings.
According to the June Economic Forecast Summary, there has been a slight downgrade in the GDP growth projection for 2025, now at 1.4%, down from 1.7% in March. The unemployment rate forecast has been revised from 4.4% to 4.5%, while the core PCE inflation estimate has increased from 2.8% to 3.1%.
Median funding rate forecasts for 2025 remain at 3.9%, suggesting that Fed officials are still aiming for two rate cuts of 25 basis points this year.
GBP/USD Market Response
At the moment, GBP/USD is trading between 1.3450 and 1.3500, facing significant resistance at the 20-day SMA level of 1.3535. If Powell leans toward a dovish stance, expectations are for an increase, possibly reaching 1.3600, with the yearly peak potentially testing 1.3631. On the other hand, if Powell adopts a hawkish approach, a drop below 1.3400 could lead to testing the 50-day SMA at 1.3376, before perhaps hitting 1.3350.
British Pound Performance This Week
The table below illustrates how the British pound is performing against other major currencies this week, showing that it has been particularly strong against the Swiss franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.25% | 0.86% | 0.03% | 0.59% | -0.62% | -0.45% | 0.67% | |
| EUR | -0.25% | 0.50% | -0.22% | 0.35% | -0.74% | -0.70% | 0.43% | |
| GBP | -0.86% | -0.50% | -0.68% | -0.15% | -1.22% | -1.18% | -0.07% | |
| JPY | -0.03% | 0.22% | 0.68% | 0.54% | -0.97% | -0.83% | 0.21% | |
| CAD | -0.59% | -0.35% | 0.15% | -0.54% | -1.14% | -1.04% | 0.07% | |
| AUD | 0.62% | 0.74% | 1.22% | 0.97% | 1.14% | 0.04% | 1.17% | |
| NZD | 0.45% | 0.70% | 1.18% | 0.83% | 1.04% | -0.04% | 1.13% | |
| CHF | -0.67% | -0.43% | 0.07% | -0.21% | -0.07% | -1.17% | -1.13% |
The heatmap illustrates how the different currencies are performing against each other this week. The base currency on the left and the estimated currency across the top indicate the respective rates of change.
