Wall Street Falls After Fed Ends Guidance; GBP/USD Holds

The Federal Reserve left its target range at 3.50%–3.75% on Wednesday and removed traditional forward guidance, prompting declines in U.S. equity markets and a sharp move in sterling. The Fed presented a shorter policy statement and shifted to a data-dependent approach.

The Federal Open Market Committee voted unanimously to hold rates. Chair Kevin Warsh announced the end of explicit forward guidance and unveiled five internal task forces to review the Fed's balance-sheet strategy, communication framework and inflation models. Updated projections showed 9 of 19 officials expect at least one rate increase before the end of 2026.

Equity benchmarks fell in New York. The S&P 500 dropped 1.2% to 7,420, the Nasdaq 100 fell about 1%, the Dow lost 507 points to 51,498 and the Russell 2000 declined 0.7%. Selling accelerated after the Fed's press conference, affecting rate-sensitive technology and other growth names.

Fixed-income markets saw broad selling and Treasury yields rose across the curve. The benchmark U.S. 30-year mortgage rate moved to an estimated 6.62% from 6.54% the prior day. The dollar strengthened late in New York trading, pressuring the euro and the pound.

Commodities reacted to higher nominal yields and the stronger dollar. Spot gold fell about 1.7% to near $4,258 an ounce. Brent crude slipped roughly 0.9% to around $78.66 a barrel. The International Energy Agency warned that global oil inventories could reach historic lows in coming months even as a U.S.-Iran memorandum aims to restore toll-free commercial shipping through the Strait of Hormuz, with physical export normalization expected to be gradual.

GBP/USD recorded its biggest single-day drop in nine months, falling near 1% after the Fed announcement. The pair halted the decline after retesting a medium-term ascending trendline in place since the Nov. 4, 2025 low and showed an unwind of extreme oversold momentum on short-term indicators. Short-term support sits in the 1.3280–1.3262 area, with near-term resistance around 1.3325; an hourly close below 1.3262 would point to further intraday downside.

Market participants noted the removal of forward guidance will move more weight onto incoming data for setting expectations. Warsh's operational changes remove explicit pre-commitments that investors had used to anticipate policy moves and aim to link market expectations more directly to economic releases.

President Donald Trump told reporters an additional rate hike “could happen” this year and added, “It's all right, whatever,” while expressing confidence in Warsh's approach.

Asian markets reacted unevenly. Japan's Nikkei 225 rose about 2% to a near-record intraday high around 71,330 and South Korea's KOSPI advanced, while Hong Kong's Hang Seng and Australia's ASX 200 fell. The yen remained close to the recent intervention threshold against the dollar at 160.65.

Traders are awaiting the Bank of England decision later in the Asian evening, where the policy rate is widely expected to be held at 3.75%. U.S. weekly initial jobless claims and the Conference Board's leading index for May are also due and could influence short-term U.S. rate expectations.