British Pound rebounds as Fed leaves rates unchanged amid hawkish divisions

• The Fed's widely anticipated decision to leave rates unchanged sees GBP/USD regain ground towards 1.3300.
• A 25-basis-point rate increase wins the backing of dissenters Cook and Hammack.
• While recognising resilience in growth and employment, the Fed cautions that inflation is still elevated.

A 10–2 vote by the Federal Reserve left interest rates unchanged, in line with market expectations, with the two dissenters backing an increase. Following the decision, the Pound Sterling regains some lost ground, with GBP/USD trading close to 1.3300.

GBP/USD regains ground towards 1.3300 after Fed holds rates despite two votes for an increase

Economic activity continues to expand, according to the Fed, which said domestic spending “has been resilient, that productivity growth is strong and that capital investment is robust.” On its employment mandate, the central bank observed: “Job gains have kept pace with the workforce, and the unemployment rate has changed little.”

Although inflation remains elevated, the central bank opted not to raise rates, allowing it to collect further information and make a better assessment of the appropriate policy stance.

Backing a 25-basis-point rate increase, Governor Lisa Cook and Cleveland Fed President Beth Hammack cast the meeting's two dissenting votes.

GBP/USD shows limited movement after Fed decision

With the decision matching expectations, the market response was subdued. As GBP/USD trades around 1.3305, the next resistance lies at the day's high (HOD) of 1.3312; initial support stands at the day's low of 1.3272.