The GBP/USD falls as investors anticipate the US Federal Reserve's monetary policy announcement. Market sentiment favors a steady interest rate from the Fed, with potential cuts later in the year.
The Pound Sterling extended its losses on Wednesday, weighed down by the persistent strength of the US Dollar ahead of the crucial US Federal Reserve monetary policy decision. The absence of significant economic data releases in the UK, barring Bank of England (BoE) Governor Andrew Bailey's appearance at the Treasury Select Committee (TSC) hearing, kept market attention focused on the upcoming Fed announcement. The GBP/USD pair traded at 1.2406, down 0.27%.
Market sentiment leans towards the Federal Reserve maintaining interest rates steady, with expectations for potential rate cuts later in the year. Investors are closely watching Fed Chair Jerome Powell's press conference for any indications regarding the future direction of monetary policy. Money markets currently project a 98% probability of the US Central Bank keeping rates unchanged. However, there are estimations that Powell and his team could implement two rate cuts of 25 basis points (bps) each – the first in June and the second towards the end of the year.US economic data released on Tuesday showed a modest improvement in Core Durable Goods Orders. Following the release, the Atlanta GDP Now model suggested that growth for the last quarter of 2024 might reach 3.2%, up from the 3% projection prior to the data. Meanwhile, financial markets experienced a recovery following Monday's sell-off after DeepSeek unveiled its latest AI model, which proved to be more cost-effective and less resource-intensive compared to OpenAI's or US-based models. Throughout the day, GBP/USD traders remained on edge, awaiting the Fed's decision and Chair Powell's press conference scheduled for 18:30 GMT.
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