GBP/USD Plunges Amid Hawkish Fed Decision
The GBP/USD has fallen to its lowest level in six weeks after the Federal Reserve's hawkish rate decision. The USD surged to a six-week high following the Fed's 25 basis point interest rate hike to 3.75%-4%, citing persistent inflation and energy pressures.
Seventeen out of eighteen policymakers support further rate hikes before the end of the year, with four anticipating two increases by then. Growth and inflation forecasts were also revised upwards. Federal Reserve Chair Kevin Warsh stated that the economy is resilient but inflation is too high.
The market interpreted this as a hawkish message, boosting the US dollar. In contrast, the Bank of England is expected to keep rates unchanged at 3.75% despite rising oil prices and inflation in the UK.