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Sterling rallies after Fed hawkish vote, though guidance is withheld

Fed futures pricing shifted, with at least one rate increase by mid-September near 64%, down from about 80% before the decision.

Reported · Written up by our desk · Major Pairs

The U.S. Federal Reserve held its target range at 3.50% to 3.75% on a 9-3 vote, but the meeting featured a notably hawkish dissent, with three members favoring an immediate quarter-point increase, a factor that pushed the British pound higher.

Sterling climbed through the 1.3300 level it had lost last week, trading just above 1.3350 after London’s session, with the move largely attributed to the post-U.S. headlines rather than domestic British data.

FXStreet said U.K. fundamentals in the session were not the driver, pointing to June retail sales beating expectations, business surveys returning to growth, and household confidence reaching a six-month high.

The piece added that the Fed attached no Summary of Economic Projections and declined to translate the dissents into forward guidance, leaving futures to reprice the path, with the December two-hike probability falling to about 42% from 57%.

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