GBP/USD Undermined by the Fed & BoE Outcomes
GBP/USD Analysis
The US Fed maintained rates at 5.25-5.5% on Wednesday, but confirmed the higher-for longer credo, in a hawksih hold. Officials still expect one more hike this year, as they kept the median terminal rate projection at 5.6% and pointed to tighter 2024 policy path than previously expected, by raising that year's forecast to 5.1% (from 4.6% previously). [1]
The Bank of England took up the baton yesterday and hit the pause button [2], after fourteen straight hikes worth 515 basis points, emboldened by the latest soft CPI report. Unlike its US counterpart, the BoE did not offer any clear hints around its next steps and the 4-5 split vote adds to the uncertainty.
These policy decisions shuttered the already waning rate advantage of the British Pound and delivered a one-two punch to GBP/USD, which extends this month's losses. It is now vulnerable to 1.2079 (38.2% Fibonacci of the 2022 low/2023 highs rally), although bears will likely need fresh impetus for a test that would bring 1.1801 in the spotlight.
On the other hand, the chart points to oversold conditions and this can give GBP/USD the chance to rebound, but the upside look unfriendly from around 1.2500 onwards. Even though the BoE paused and was vague around the outlook, it does not mean that rates have peaked. Speaking on Bloomberg after Thursday's decision, Governor Bailey said "the job isn't done yet and we will of course keep on doing the job". [3]
Nikos Tzabouras
Senior Financial Editorial Writer
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. With extensive experience in market analysis and a strong foundation in international relations, he brings a unique perspective to financial markets. Nikos emphasizes not only technical analysis but also on fundamentals and the growing influence of geopolitics on financial trends.
As a Senior Financial Editorial Writer, he delivers comprehensive and forward-looking insights across a wide range of asset classes, including equities, commodities, and currencies. His work explores how macroeconomic events, political developments, and global policies impact market dynamics, providing readers with a deeper understanding of both short-term movements and long-term trends.
References
| Retrieved 22 Sep 2023 https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20230920.pdf | |
| Retrieved 22 Sep 2023 https://www.bankofengland.co.uk/monetary-policy-summary-and-minutes/2023/september-2023 | |
| Retrieved 18 Apr 2026 https://www.youtube.com/watch |
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