GBP/USD whips but sees little momentum as markets digest middling Fed Powell comments

GBP/USD tested lower, but recovered to nearly flat on the day post-Fed.
Fed held rates steady as rate futures broadly anticipated.
Fed Chair Powell: the Fed doesn't act until seeing more than we see now.

Joshua Gibson FXStreet

On Wednesday, GBP/USD fluctuated, dipping below 1.2420 before rising back to 1.2450 as the ongoing battle between bulls and bears resulted in less-than-noteworthy intraday volatility. The Federal Reserve (Fed) kept rates unchanged, as expected by rate futures markets, with Fed Chair Jerome Powell emphasizing their data-driven strategy for rate modifications.

Chair Powell highlighted that the Federal Open Market Committee (FOMC) is monitoring the policies enacted by US President Donald Trump closely, but he confirmed that President Trump has not communicated directly with the Fed. As an independent federal entity, the White House exerts minimal influence over the Federal Reserve's policy directions. Additionally, Powell remarked that while inflation is gradually approaching the median target levels, the current economic conditions, alongside concerns regarding President Trump’s extensive trade policies, mean the Fed is not in a hurry to alter the restrictiveness of monetary policy rates.

Furthermore, rate markets have reduced their expectations for Fed rate cuts in 2025. Based on the CME's FedWatch Tool, rate futures markets anticipate no changes in the federal funds rate until at least June.

GBP/USD one-hour chart

Economic Indicator

Fed Interest Rate Decision

The Federal Reserve (Fed) deliberates on monetary policy and makes a decision on interest rates at eight pre-scheduled meetings per year. It has two mandates: to keep inflation at 2%, and to maintain full employment. Its main tool for achieving this is by setting interest rates – both at which it lends to banks and banks lend to each other. If it decides to hike rates, the US Dollar (USD) tends to strengthen as it attracts more foreign capital inflows. If it cuts rates, it tends to weaken the USD as capital drains out to countries offering higher returns. If rates are left unchanged, attention turns to the tone of the Federal Open Market Committee (FOMC) statement, and whether it is hawkish (expectant of higher future interest rates), or dovish (expectant of lower future rates).

GBP/USD hangs close to 1.3500, awaits fresh impetus from US CPI

GBP/USD keeps its range around 1.3500 in Wednesday's European trading. The pair continues to trade with caution as the US Dollar (USD) holds ground ahead of a crucial US consumer inflation report. Investors are watching this upcoming reading closely, as it is expected to play a major role in shaping the Federal Reserve’s next interest rate decision and the USD valuation.

EUR/USD consolidates below 1.1550 ahead of US CPI

EUR/USD struggles to gain any meaningful traction and holds steady around 1.1550 in the European trading hours on Wednesday, maintaining a familiar range held over the past week or so. Traders keenly await the release of the key US inflation data and further developments surrounding the Middle East crisis before placing fresh directional bets.

Gold retakes $4,400, eyes two-month high as traders look to US CPI for Fed hike cues

Gold attracts fresh buyers during the Asian session on Wednesday and climbs back above the $4,400 mark, closer to its highest level since June 5, which was touched the previous day. Traders now look to the US Consumer Price Index report for more cues about the US Federal Reserve's future policy path amid inflation risks stemming from volatile oil prices.

Crypto Overview: Bitcoin loses $64,000 – LINK, DOGE sustain gains

Bitcoin is trading below $64,000 amid a broader market risk-off sentiment. Emerging as top performers over the last 24 hours, Chainlink and Dogecoin sustain gains, hinting at an extended recovery. CoinMarketCap’s Fear and Greed Index at 38 reflects persistent risk-averse sentiment in the crypto market.

AI defies the disinflationary playbook: Why lower oil prices might not be enough to cool core inflation

The global economic landscape has been fixated on the Middle East since the US-Iran war started in late February, reacting to significant changes in crude Oil prices and assessing how they could influence inflation dynamics and growth outlook.

9-3: Is the Federal Reserve’s vote tally Warsh's new forward guidance?

The rate did not move. Neither did the statement, and that’s the more interesting fact. Set the July 29 Federal Open Market Committee (FOMC) statement beside the one issued on June 17, and the two documents are identical apart from a single verb and a paragraph at the bottom naming three dissenters.