GBP/USD slides below 1.3300 as Powell warns on sticky inflation

GBP/USD was nearly flat on the day but swung through a wide intraday range, from a session high close to 1.3375 down to a low around 1.3283. A brief bounce lifted price back toward 1.3340 ahead of the Federal Reserve's (Fed) decision, but that recovery was completely unwound in the final hours as a sharp move lower during Powell's press conference drove the pair to its session lows.

The Federal Open Market Committee (FOMC) voted 11-1 to hold rates at 3.50% to 3.75%, with Governor Stephen Miran again the lone dissent in favor of a cut. The updated Summary of Economic Projections (SEP) carried the hawkish punch: officials raised their 2026 Personal Consumption Expenditures (PCE) inflation forecast to 2.7% from December's 2.5% on both headline and core measures, while nudging Gross Domestic Product (GDP) growth up to 2.4%. The dot plot median still points to one cut this year, but the number of members projecting no cuts rose to seven from six, and the longer-run neutral rate estimate ticked up to 3.1%.

Chair Powell struck a cautious tone at the presser, saying the Fed is making "some progress on inflation, not as much as we had hoped." He pointed to goods inflation still running hot from tariffs as the main obstacle, noting that between half and three-quarters of core inflation above target is tariff-driven. On the Middle East oil shock, Powell acknowledged near-term inflation expectations have risen from surging energy costs but said it is "too soon to know the scope and duration" of the effects. He was clear the Fed cannot look through energy-driven inflation until it has "checked that box" on containing tariff-related goods prices first. Powell described the current rate as within the neutral range and pushed back against characterizing the economy as stagflationary, noting that some offset from higher US energy production could materialize over time if oil prices stay elevated.

Attention now turns to the Bank of England's (BoE) rate decision on Thursday. The Monetary Policy Committee (MPC) held rates in a narrow 5-4 vote in February, but the energy shock from the Iran conflict has dramatically shifted the outlook. Bank of America dropped its March cut call earlier this week, and most analysts now expect a wider hold vote, potentially 7-2 or 6-3, as upside inflation risks from rising oil prices make easing untenable for now. Governor Andrew Bailey had described the March decision as "a genuinely open question" in his recent parliamentary testimony, but January services Consumer Price Index (CPI) printing at 4.4%, well above the BoE's 4.1% forecast, and the oil-driven inflation threat likely tipped the balance toward a hold. Most economists have pushed cut expectations to April at the earliest.

GBP/USD 15-minute chart

Technical Analysis

In the 15-minute chart, GBP/USD trades at 1.3290. The near-term bias is mildly bearish as price holds below the 200-period exponential moving average near 1.3326, with the average flattening and now acting as a dynamic cap after earlier consolidation around it. The latest Stochastic reading has slid into single digits, confirming strong downside momentum after failing to sustain overbought conditions earlier in the session, which reinforces selling pressure while also warning of an oversold short-term state.

Immediate resistance emerges at the 1.3320–1.3335 area, where recent intraday highs cluster just beneath the 200-period EMA, and a break above this zone would be needed to ease the current downside tone. A further hurdle is located at 1.3360, aligning with the day’s open and a prior intraday pivot. On the downside, initial support is at 1.3285, the latest price floor, with a clear break lower exposing the next bearish extension toward the 1.3250 region. As long as price holds beneath the 1.3320–1.3335 band, sellers retain control in the very near term.

(The technical analysis of this story was written with the help of an AI tool.)