The GBP/USD pair held steady around 1.3465 during early Asian trading hours on Wednesday. However, comments from the Bank of England (BoE) suggest monetary policy will remain on a gradual downward path, which may continue to support the pound against the US dollar.
Financial markets are expected to see thin trading volumes as market participants prepare for the New Year holiday. At its December policy meeting, the BoE cut its main interest rate from 4.00% to 3.75%—the lowest level in nearly three years. During the post-meeting press conference, Governor Andrew Bailey indicated that further rate cuts are likely but noted that “how much further we go becomes a closer call” with each cut.
Money markets currently anticipate at least one more UK rate reduction in the first half of the year, with roughly a 50% probability of a second cut before year-end, according to Reuters.
On the other side of the Atlantic, the US Federal Reserve cut its federal funds rate by 25 basis points at its December meeting, setting a target range of 3.50%–3.75%. Minutes from the Federal Open Market Committee (FOMC) meeting, released on Tuesday, revealed that most participants would be comfortable holding off on further cuts if inflation continued to decline over time. At the same time, some officials argued for pausing rate reductions to support a weakening labor market after three cuts in 2023.
Following the release of the FOMC minutes, markets are now pricing in about an 85% chance that the Fed will leave interest rates unchanged in January, according to the CME FedWatch Tool.
https://bitcoinethereumnews.com/finance/pound-sterling-trades-flat-above-1-3450-amid-thin-trading-volume/
