GBP Falls as US Dollar Gains Traction Amid FOMC Policy Split

The British Pound (GBP) fell against the US Dollar (USD) on Friday, reversing its three-day gains as the USD received support from a hawkish pause by the Federal Reserve and an internal FOMC policy split. The GBP/USD pair depreciated to around 1.3450 during Asian hours.

Strategists at HSBC noted that the Fed's decision to leave interest rates unchanged for a fifth consecutive meeting, in line with expectations, revealed a lively debate within the FOMC. A 9-3 vote underscored the extent of internal divergence over the appropriate policy path.

The USD may face challenges amid easing safe-haven demand, driven by a reduction in global risk aversion spurred by positive diplomatic developments. Tensions in the Middle East have shown signs of cooling as negotiations between the US and Iran progress toward restoring stability in the Strait of Hormuz.