GBP/USD Price News, Forecast: GBP Higher Ahead of FED Rate Cut

Modified: Wednesday, 17 September 2025 18:04 BST - Written by Tim Boyer

STORY LINK GBP/USD Price News, Forecast: GBP Higher Ahead of FED Rate Cut

The Pound US Dollar (GBP/USD) exchange rate dipped slightly on Wednesday, consolidating below the previous day’s peak as investors turned cautious ahead of key central bank announcements.

At the time of writing, GBP/USD was trading at $1.3649, easing back from Tuesday’s ten-week high of $1.3668.

The Pound (GBP) held steady after the UK’s August consumer price index came in exactly as anticipated, offering investors little fresh direction.

Headline inflation remained at 3.8%, while core inflation ticked lower from 3.8% to 3.6%. The figures broadly matched market expectations, meaning they are unlikely to sway policymakers at the Bank of England (BoE). With little new information for traders to act on, Sterling traded quietly as attention shifted to the central bank’s upcoming policy announcement.

The US Dollar (USD) inched higher on Wednesday, recovering slightly from the previous day’s steep losses as bargain hunters moved in.

The ‘Greenback’ had slumped after Stephen Miran, a close ally of President Donald Trump, was confirmed by the Senate to join the Federal Reserve’s board of governors ahead of this week’s policy meeting. With Trump having repeatedly urged the Fed to deliver sharper rate cuts, Miran’s appointment stoked expectations of a more dovish stance and reignited fears over the central bank’s independence. This sent USD tumbling to a ten-week low against GBP.

By Wednesday morning, the Dollar had managed to edge away from its weakest levels, though trading remained subdued with investors reluctant to make bold moves before the Fed’s policy announcement.

GBP/USD Exchange Rate Outlook: Fed and BoE in the Spotlight

Looking ahead, the Pound US Dollar exchange rate could push to fresh multi-month highs as both the Federal Reserve and Bank of England deliver their latest policy decisions.

Attention first turns to the Fed, where markets have already fully priced in a 25bps rate cut. The real focus will be on forward guidance – any signals of a deeper or faster rate-cutting cycle could drive the US Dollar lower. There is also a slim possibility of a 50bps cut, which, while unlikely, would likely trigger heavy losses for the ‘Greenback’.

The BoE’s announcement follows on Thursday. Policymakers are widely expected to keep rates steady, with UK inflation still running at nearly twice the central bank’s 2% target. Should the BoE push back against expectations of further cuts in 2025, the Pound could climb sharply, bolstering GBP/USD.

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TAGS: Pound Dollar Forecasts