GBP/USD stayed in a negative intraday move on Wednesday after the Federal Reserve held interest rates unchanged at Jerome Powell’s final meeting as Fed Chair. The pair traded near 1.3480, down 0.30%, ahead of Powell’s press conference.
The pound fell towards the 1.3480 area as the US Dollar strengthened before the Fed decision. US Dollar demand was also supported after the United Arab Emirates exited OPEC, which lifted safe-haven flows.
Market Focus Shifts To Central Banks
During the European session, GBP/USD was broadly sideways around 1.3500. Traders were waiting for monetary policy updates from both the Federal Reserve and the Bank of England.
Looking back at late 2025, we can see the market was nervous about the end of the Powell era at the Fed. The pound was trading around 1.3500 against the dollar then, a level that seems very distant from where we are today. That period marked a clear turning point for the dollar’s strength.
Since then, the policy paths of the two central banks have split dramatically. The new Fed leadership has been forced to keep rates elevated to fight stubborn US inflation, which latest figures show is still hovering around 3.8%. In contrast, the Bank of England has softened its stance as UK inflation has cooled to 2.5%, shifting its focus more towards avoiding a recession.
This divergence is backed by the latest economic data from just last week. US jobless claims came in at a strong 205,000, while the UK reported a surprise 0.7% fall in retail sales for March. These numbers reinforce the view of a robust US economy versus a fragile UK one, keeping downward pressure on the GBP/USD pair, now trading near 1.2250.
Trade Ideas And Volatility Watch
For traders, this suggests that bearish strategies on the pound remain attractive. We should consider buying GBP/USD put options with strike prices around 1.2100 to profit from further downside in the coming weeks. For those expecting a slower grind down, selling out-of-the-money call options provides a way to collect premium while maintaining a bearish bias.
Volatility in the pair could also pick up around upcoming central bank meetings. Any hint from the Bank of England that it is preparing for a rate cut would likely accelerate the pound’s decline. This makes long volatility positions, such as straddles, an interesting play ahead of those key dates if you expect a large move but are unsure of the direction.
