– Written by
Minesh Chaudhari
STORY LINK Pound Sterling Price News and Forecast: GBP/USD Slips on UK Fiscal Concerns
The Pound US Dollar (GBP/USD) exchange rate fluctuated on Monday, as expectations of a Bank of England (BoE) interest rate hike next month offered some support to Sterling, while concerns surrounding the UK’s upcoming Autumn Budget kept the pairing unsettled.
At the time of writing, GBP/USD was trading at $1.3230, having wavered throughout the session.
The Pound (GBP) drew some support on Monday as rising inflationary pressures strengthened expectations that the Bank of England could raise interest rates next month.
According to accountancy and advisory firm BDO, businesses are facing their most acute inflationary pressures since June 2023, with higher energy and raw material costs driving the increase.
However, concerns over the UK’s public finances capped Sterling’s support, after the Institute for Fiscal Studies (IFS) warned that rising inflation had helped create a £35bn funding shortfall ahead of the Autumn Budget.
The US Dollar (USD) initially came under pressure on Monday as investors showed a greater appetite for risk, but the ‘Greenback’ later regained some support.
Sentiment deteriorated following reports that Russia had attacked Ukrainian energy infrastructure on Sunday evening, despite US President Donald Trump claiming earlier that morning that both sides had agreed to an ‘energy ceasefire’.
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Near-Term GBP/USD Forecast: BoE and Fed Speakers in Focus
Looking ahead, Tuesday’s speeches from Bank of England policymakers Megan Greene and Swati Dhingra could offer fresh clues about the outlook for UK interest rates.
With Greene generally taking a hawkish stance and Dhingra leaning dovish, any conflicting messages could leave the Pound without a clear direction.
Federal Reserve officials are also scheduled to speak.
If their comments strengthen expectations of a December rate hike, the US Dollar could find further support.
Meanwhile, changing risk appetite is likely to remain a key driver for the safe-haven ‘Greenback’.
Shifts in sentiment could therefore keep the Pound US Dollar exchange rate volatile.
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TAGS: Pound Dollar Forecasts
