Pound slips as Fed stays firm and BoE hints at cautious policy path
GBP slips as Fed signals no rush for rate cuts
The British pound fell below $1.30 on Friday, sliding to around $1.2920 against the U.S. dollar after the Federal Reserve reiterated its commitment to a cautious approach regarding rate cuts amid ongoing economic uncertainty. Fed Chair Jerome Powell and other policymakers emphasized that the central bank is not rushing to lower interest rates, citing the inflationary risks posed by President Trump’s new tariff measures.
As a result, the U.S. dollar Index rose above the key 104.00 level, adding pressure on GBP/USD.The Fed’s decision to keep rates in the 4.25%-4.50% range, along with Trump’s planned reciprocal tariffs on April 2, has weighed on global risk sentiment. Analysts noted that such trade actions may dampen growth prospects across economies and delay monetary easing efforts from central banks worldwide. According to CME FedWatch, markets still expect two rate cuts in 2025 but see virtually no change in May.
GBP/USD price dynamics (June 2024 - March 2025) Source: TradingView.
BoE holds steady as UK economic data softens
On the domestic front, the Bank of England kept its benchmark interest rate unchanged at 4.5%, with eight of nine MPC members voting for a pause. Governor Andrew Bailey reaffirmed the bank’s “gradually declining” monetary policy path, despite lingering concerns over stubborn services inflation. UK wage growth remained firm, with average earnings excluding bonuses rising 5.9% in the three months through January, potentially complicating the BoE’s easing strategy.
Investors now turn their focus to the UK’s February CPI data, due next week, which could provide clearer signals on the BoE’s next move. Meanwhile, political uncertainty and sluggish consumer confidence continue to pose headwinds for the pound.
Technical outlook and levels to watch
GBP/USD has failed to break above the four-month high of $1.3, triggering a pullback. The 14-day RSI eased from overbought territory above 70, suggesting consolidation. Key support levels are seen at 1.2770 and 1.2615, while resistance remains at 1.31. Advancing 20- and 50-day EMAs at 1.2855 and 1.2712 support the overall bullish trend unless these levels give way.
Earlier this month, we highlighted that the pound’s bullish momentum would likely face resistance near the 1.30 level. With the Fed reaffirming its hawkish bias and the BoE staying cautious despite sticky inflation, Sterling’s upside now hinges on next week’s CPI and labor data releases
