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GBP/USD slips near 1.3345 as hawkish Fed supports the dollar
The Bank of England is set to hold its 3.75% rate on Thursday, while the Fed left its range at 3.50% to 3.75% but showed some support for an added 25 basis point hike.
GBP/USD edged lower toward 1.3345 during early European trading, as the US dollar gained ground on the back of hawkish signals from the Federal Reserve, according to FXStreet.
The Fed left the Federal Funds Rate target range at 3.50% to 3.75% at its July meeting on Wednesday, but the statement included that three committee members backed a 25 basis point hike, and Fed Chairman Kevin Warsh said tightening has already done work for policymakers with the committee prepared to move quickly if inflation pressures accelerate.
FXStreet also linked the dollar's strength to renewed Middle East tensions, noting that renewed hostilities could bolster safe haven demand for the greenback.
The next key catalyst is the Bank of England rate decision later on Thursday, with FXStreet saying the BoE is widely expected to keep interest rates steady at 3.75% as it weighs the impact of the US-Iran conflict, including the closure of the Strait of Hormuz for much of the past five months, and how that affects inflation.
Latest closeGBP/USD 1.337 ▲0.6%