Fed Hawks Boost US Dollar as Pound Faces Pressure Ahead of BoE Rate Decision

The British Pound declined against the US Dollar on Thursday as hawkish signals from the Federal Reserve boosted the Greenback's appeal.

The GBP/USD pair lost ground to around 1.3345 in early European trading hours, with the US Dollar benefiting from the Fed's decision to keep interest rates steady at a range of 3.50% to 3.75%. The three-member committee voted for a 25-basis-point rate hike, which could indicate future tightening.

Fed Chairman Kevin Warsh emphasized that policymakers will be quick to act if inflation pressures accelerate, further bolstering the US Dollar's safe-haven status.

The Bank of England's interest rate decision later on Thursday is expected to keep rates steady at 3.75%, but analysts warn that a hawkish Fed rate decision could hasten the Pound's return to below 1.32 and its late June low, according to Societe Generale.