ExchangeRates.org.uk - At the time of writing, GBP/USD traded at around $1.3375, up 0.4% on the week but shy of an earlier high of $1.3434. The Pound (GBP) stumbled at the start of the week following some downbeat UK PMIs. The latest surveys showed a steeper-than-expected slowdown in British business activity, thereby denting GBP. However, Sterling was able to quickly bounce back as there were signs of underlying strength in the UK’s vital services sector. Comments from BoE Governor Andrew Bailey lent the Pound more support, as he suggested interest rates would come down ‘gradually’, reinforcing bets on a slow pace of policy loosening from the BoE. GBP/USD struck a near 31-month high midweek, as a risk-on mood and BoE-Fed policy divergence propelled the pairing higher. Sterling then wavered through the latter part of the week, as a lack of UK data left the currency vulnerable to a shifting market mood.
US Dollar (USD) Slides on Fed Rate Cut Bets
The US Dollar (USD) faced heavy selling pressure last week amid growing bets on another bumper 50bps interest rate cut from the Federal Reserve when it meets to set policy in November. A risk-on mood also drained demand for the safe-haven ‘Greenback’, as China unveiled new stimulus measures to boost its economy. Market sentiment was tested, however, as the crisis in the Middle East escalated with Israel intensifying its attacks on Lebanon. Nevertheless, the possibility of another half-point cut from the Fed kept the US Dollar subdued.
GBP/USD Exchange Rate Forecast: Non-Farm Payrolls to Hammer the US Dollar?
Market-moving British data is in short supply this week, with the UK’s final GDP reading for the second quarter perhaps being the key release. If it confirms robust growth in the British economy, Sterling could enjoy support. US data is more plentiful, with a speech from Fed Chair Jerome Powell on Monday and the latest ISM PMIs on Tuesday and Thursday. Dovish comments and downbeat readings could dent USD. The spotlight, however, is on the latest US non-farm payrolls report on Friday. With hiring expected to have slowed in September, and the US unemployment rate forecast to rise from 4.2% to 4.3%, fresh Fed rate cut bets could see USD slump.
This content was originally published on ExchangeRates.org.uk
