Ella 
In Asia on Thursday, GBP/USD extended losses for the second consecutive day, falling to around 1.2320. The Fed maintained its hawkish stance, weighing on GBP/USD.
As expected, the Federal Reserve chose to keep its current benchmark policy rate unchanged at 5.5% at its meeting on Wednesday.
The Fed expects inflation to be slightly higher than previously forecast and is expected to try to raise interest rates again in 2023.
As a result, the U.S. dollar (USD) was supported by a surprise upgrade in interest rate forecasts for 2024 by Federal Reserve officials, raising rates from 4.6% to 5.1%.
The U.S. Dollar Index (DXY), which measures the dollar’s performance against six other major currencies, extended gains and hit a six-month high of 105.50 at press time. In addition, rising U.S. bond yields will also help the dollar rise.
As of press time, the 10-year U.S. Treasury yield rose to 4.43%, the highest level since 2007.
Additionally, at a press conference immediately following the rate decision, Fed Chairman Jerome Powell reiterated the Fed’s commitment to achieving its long-term inflation target of 2%.
Powell said the central bank may be nearing the top of its rate-hiking cycle, but stressed that future policy decisions will depend on data-driven analysis.
In terms of sterling, expectations that the Bank of England will soon stop its interest rate hike cycle continue to weigh on the pound, causing GBP/USD to fall.
British data released on Wednesday showed that the overall consumer price index (CPI) fell to 6.7% in August from 6.8% in July, contrary to the expected value of 7.1%, and market sentiment has undergone a major change.
Additionally, the core consumer price index fell to 6.2% in the 12 months to August from 6.9% in July. These developments coincide with renewed concerns about a potential economic downturn in the UK and signs of a cooling labor market, in line with market expectations.
Therefore, market focus will remain on the Bank of England’s interest rate decision to be announced later in the day.
Investors are likely to focus on upcoming U.S. data on Thursday, including U.S. initial jobless claims last week, the Philadelphia Fed manufacturing survey and existing home sales.
