US stocks slumped and the dollar rallied to a five-week high after the Federal Reserve signaled further rate hikes to combat inflation, defying pressure from the White House.
The S&P 500 dropped 0.67% after the Fed's interest rate hike, as higher borrowing costs pressure equities.
The Dow Jones Industrial Average slumped 1.4% following the Fed's rate increase.
Sterling fell 0.5% to $1.34155 ahead of the Bank of England meeting, pressured by a stronger dollar and UK inflation concerns.
The dollar index rose 0.3% to a near five-week high after the Fed's rate hike.
The euro fell 0.3% to $1.1502 as the dollar strengthened after the Fed decision.
The tech-heavy Nasdaq 100 fell 0.1% after the interest rate hike.
The Russell 2000 index of small-cap stocks fell 0.2% as the Fed raised rates.
A fresh surge in oil prices is cited as a driver of elevated inflation and the Fed's hawkish stance, implying ongoing oil price strength.
The Federal Reserve raised interest rates by 0.25 percentage points to a range of 3.75% to 4%, marking the first hike in three years. Fed Chair Kevin Warsh cited persistent inflation and economic resilience as primary drivers for the move, despite vocal opposition from President Donald Trump who demanded immediate rate cuts.
The Fed cited persistent inflation, which remains nearly double its 2% target, alongside a resilient economy and strong labor market data that necessitated a tighter monetary policy.