GBP/USD drifted higher post-Fed, trading up 0.14% at 1.2858 within Wednesday's range of 1.2860-1.2820. The Federal Reserve held rates as expected, causing U.S. short-term interest rate futures to dip slightly, with odds for a third rate cut in 2024 slipping. The Fed noted some progress towards the 2% inflation goal but remained attentive to risks. Sterling shrugged off the dip in GBP/JPY, steadying ahead of the Fed and Bank of England (BoE) rate decisions.

Attention now shifts to the BoE's rate decision on Thursday. Interest rate probability (IRPR) markets price in a 66% chance of a 25 basis point cut. Despite this, short-term interest rate strips suggest GBP/USD holds a slight advantage, which is GBP-positive. However, much depends on BoE guidance; if dovish tones increase, GBP longs might exit.

Support levels for GBP/USD include the 50% Fibonacci retracement of 1.2611-1.3043 at 1.2824, the 30-day moving average (DMA) at 1.2812, and the July 9 low at 1.2774. Resistance levels are seen at the July 30 high of 1.2865, the 200-hour moving average (HMA) at 1.2883, and the high of 1.2913.

In early North American trading, GBP/USD held steady near 1.2840, shrugging off post-BoJ volatility in GBP/JPY as traders awaited the Fed's decision later in the day and the BoE's rate decision on Thursday. The degree of dovishness from both central banks is likely to tip the balance for sterling. With the Fed expected to hold rates steady, traders will scrutinise comments by Chair Jerome Powell that could support market bets on up to three U.S. rate cuts this year.

Rate markets currently see a 65% chance of a BoE cut on Thursday, with rising expectations of easing this week weighing on the pound recently. However, support appears firm near 1.2823, the 50% Fibonacci retracement level of 1.2613-1.3042, and just above the significant support at 1.28. Despite the BoE's expected early start to accommodation, short-term rate futures are pricing a slightly less-dovish UK rate path compared to the U.S., which is likely to keep the pound relatively firm against the dollar, barring an overly dovish BoE stance.

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