GBP/USD falls 0.52% after Fed’s updated projections signal higher-for-longer rates, boosting the US dollar.
The British pound slumped against the US dollar after the Federal Reserve left interest rates unchanged but revised its dot plot to reflect a more hawkish outlook. Half of the Fed’s policymakers now expect rates to remain elevated, pushing the median 2026 forecast to 3.8%, up from 3.4% in March.
The Fed removed forward guidance language in its statement, acknowledging strong economic growth and stable labor markets despite geopolitical risks. Core PCE inflation is projected at 3.3%, well above the 2% target, reinforcing the central bank’s commitment to price stability.
GBP/USD dropped to 1.3351, its lowest level in four days, before paring some losses ahead of Fed Chair Kevin Warsh’s press conference.