GBP/USD Downside Risk Grows on Hawkish Fed Surprise

A unanimous Fed vote to hike rates has reinforced dollar demand across the board, putting fresh downside pressure on GBP/USD. Even with split forward guidance among committee members, the immediate market reaction favors further USD strength as investors price in a more aggressive tightening path.

For sterling, this comes at an inconvenient moment. The Bank of England's cautious tone—despite August inflation ticking up to 2.9%—suggests policymakers are reluctant to match Fed hawkishness, widening the potential rate differential that has historically weighed on Cable.

Traders should watch for continued dollar bid flows following the 600-point Dow selloff, as risk-off conditions typically favor the greenback over sterling in cross-asset flows.