GBP/USD is trading under pressure near 1.3365 in early European hours on Thursday as the USD rebounds from its post-Fed lows. Still, downside traction may remain limited following the Federal Reserve’s rate cut at its December meeting. Traders now turn their attention to the upcoming US Initial Jobless Claims report due later Thursday, which could inject fresh volatility into the pair.
Fed signals patience after third consecutive rate cut
Markets continue to absorb the Fed’s widely anticipated decision to deliver a third consecutive rate cut on Wednesday. The central bank lowered interest rates again but indicated that it may keep policy steady in the coming months. Two policymakers dissented in favor of no change, while Stephen Miran – appointed by former President Trump in September – pushed for an even larger cut.
During the post-meeting press conference, Chair Jerome Powell emphasized that policymakers need time to assess how this year’s three rate reductions filter through the economy. He noted that incoming data between now and the January meeting will be crucial. Updated projections signaled just one rate cut in 2026, though Powell acknowledged that the path could shift if economic conditions evolve.
BoE outlook weighs on pound as markets bet on next week’s cut
Sterling faces added pressure as expectations build for a Bank of England rate cut next week. Markets are now pricing nearly an 88% probability of a reduction after recent data signaled easing inflationary pressures. The dovish repricing, combined with the USD’s modest recovery, is limiting GBP/USD’s ability to regain bullish momentum.
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