GBP/USD Hits Seven-Week Lows as Fed Rate Hike Boosts US Dollar

The Pound to Dollar exchange rate (GBP/USD) fell to seven-week lows around 1.3365 after the Federal Reserve raised interest rates and signaled further tightening is likely, while the Bank of England held at 3.75%, leaving Sterling under pressure.

Despite stronger-than-expected UK retail sales, which rose 0.5% in August, Sterling struggled to recover as the Fed's decision strengthened the Dollar's interest-rate advantage.

The Federal Reserve increased benchmark interest rates by 25 basis points to 3.75%-4.00%, with 16 of 18 policymakers expecting at least one further rate increase before the end of 2026.