GBP/USD trades steadily above 1.3450 as cautious BoE signals and mixed Fed expectations keep the pair range-bound.
The GBP/USD trading outlook remains steady as the currency pair trades above the 1.3450 level during early Asian hours on Wednesday. Thin holiday trading volumes and cautious signals from both the Bank of England and the US Federal Reserve have limited price movement, keeping the pair range-bound.
GBP/USD Trading Outlook: Pair Holds Above 1.3450 Amid BoE
The GBP/USD pair traded sideways above the 1.3450 level during early Asian hours on Wednesday, reflecting subdued market participation ahead of the New Year holiday period. With many global traders away from their desks, price action has remained limited, keeping the pair confined near the 1.3460–1.3470 zone.
GBP/USD Trading Outlook Holds Steady Above 1.3450
Sterling has found modest support following recent guidance from the Bank of England (BoE), which indicated that interest rates are likely to move lower only gradually. While the central bank has already reduced borrowing costs, policymakers have emphasised a cautious approach going forward, aiming to balance easing inflation pressures against lingering economic risks.
At its most recent policy meeting in December, the BoE lowered its benchmark interest rate to 3.75%, marking the lowest level in nearly three years. Governor Andrew Bailey highlighted that future cuts would depend heavily on incoming economic data, suggesting that each decision will require careful consideration. Market expectations currently point toward at least one additional rate cut in the first half of the year, with the possibility of another before year-end.
On the US Dollar side, sentiment remains mixed after the Federal Reserve’s latest policy update. The Fed reduced rates by 25 basis points in December, bringing the federal funds rate into the 3.50%–3.75% range. However, minutes from the Federal Open Market Committee revealed a more cautious stance, with many officials preferring to pause further easing unless inflation continues to show clear signs of cooling.
Some policymakers also argued that holding rates steady for a period may be appropriate, particularly after multiple cuts earlier in the year aimed at supporting a softening labour market. As a result, traders are now largely pricing in a pause at the Fed’s January meeting, which has helped limit downside pressure on the US Dollar.
Looking ahead, GBP/USD is likely to remain range-bound in the near term as thin liquidity conditions persist. Clear direction may only emerge once normal trading volumes return and fresh economic data provides stronger clues on the future path of monetary policy in both the UK and the United States.
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