Sterling Under Pressure as Fed Tightens and BoE Holds

The Federal Reserve is set to lift its policy rate ceiling to 4.00% today, widening the yield gap in favor of the US dollar and putting pressure on the sterling.

GBP/USD ended Tuesday near 1.3470, down 0.2%, with trading framed by the Fed's decision and the Bank of England's expected move tomorrow.

The UK's inflation rate is forecast to rise to 3.1% year-on-year from 2.9%, while core inflation is seen steady at 2.6% and the retail price index at 3.5%.

The Bank of England decides on Thursday, with Bank Rate forecast unchanged at 3.75% and a vote expected at 6-3.