Pound-to-Dollar Rate Rangebound Between 1.33-1.34 Ahead of Fed

May 7, 2025 - Written by David Woodsmith

STORY LINK Pound-to-Dollar Rate Rangebound Between 1.33-1.34 Ahead of Fed

The Pound to US Dollar exchange rate (GBP/USD) traded in a narrow range on Wednesday, as markets braced for the Federal Reserve’s latest interest rate decision.

At the time of writing, GBP/USD was hovering at $1.3340. Almost unchanged from Wednesday’s opening levels.

The US Dollar (USD) saw limited movement during Wednesday’s session as investors adopted a cautious stance ahead of the Federal Reserve’s latest interest rate decision.

While the Fed is expected to leave its monetary policy untouched this month, significant focus is likely to be placed on the bank’s forward guidance in light of last week’s dismal GDP figures.

USD investors will be particularly eager for Fed Chair Jerome Powell’s take on the situation. Should Powell strike a pessimistic tone or highlight risks to the US economy, the ‘Greenback’ could lose some ground.

Markets will also be watching for how US President Donald Trump will react to the Fed’s rate decision. In recent weeks, he has ramped up pressure on Powell to pursue more aggressive rate cuts.

A repeat of this following the Fed’s rate decision could stoke fears over the central bank’s independence under Trump and weigh on USD sentiment.


The Pound (GBP) was similarly subdued on Wednesday, amid a pause in Sterling’s gains from earlier in the week.

GBP exchange rates surged on Tuesday, amid hopes a newly unveiled UK-India trade agreement, and refresh trade relationship between the UK and EU could help to revive UK economic growth.

Despite this optimism, the Pound’s upside potential was capped on Wednesday as observers raised concerns over some aspects of the UK-India deal. Namely, the exemption of Indian workers from national insurance payments for their first three years in the UK, which raised concerns over the impact on already stretched public finances.

Attention is now turning to the Bank of England (BoE) own policy announcement on Thursday, which is expected to play a key role in determining the trajectory of the Pound US Dollar exchange rate through the second half of the week.

Another 25-basis-point rate cut is widely expected this month. But with that move largely priced in, the Pound’s reaction is likely to hinge on the BoE’s forward guidance.

Should policymakers signal further rate cuts may be on the horizon, GBP could come under renewed pressure.

At the same time, developments in global geopolitics, such as rising tensions between India and Pakistan, could spark demand for safe-haven assets like the US Dollar in the latter half of the session.

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TAGS: Pound Dollar Forecasts