GBP/USD sees a downturn, trading between 1.2660 and 1.2690, after Fed maintains rates and Chair Powell downplays immediate rate cut prospects.
Powell's remarks indicate rate cuts depend on economic conditions, with no immediate plans for reduction, adding pressure on the Pound.
The Fed's unanimous decision to hold rates steady and focus on inflation targets influences currency markets, with mixed responses in Treasury yields and the Dollar Index.
The GBP/USD extended its losses late in the North American session, as the Federal Reserve (Fed) decided to keep rates unchanged, while Fed Chair Powell poured cold water on rate cut speculations for March. At the time of writing, the major trades were volatile, around 1.2660 – 1.2690, as Fed Chair Powell is taking the stance
Fed Chair Powell comments
Fed Chair Jerome Powell stated that policy rates have likely reached their peak, suggesting the possibility of rate reductions within the year. However, he emphasized that any decision on rate cuts would be contingent on the progression of the economy. Powell highlighted the ongoing uncertainty in the economic outlook and clarified that decisions on monetary policy would be determined on a meeting-by-meeting basis.
He also mentioned that the topic of rate cuts was not a subject of discussion in the recent meeting, indicating that the Federal Reserve is not in a hurry to declare success in its battle against inflation. Additionally, Powell recently expressed his view that a rate cut in March is unlikely to be considered
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