Pound Sterling Today: GBP Steady in Wake of BoE Governor Bailey Comments

September 26, 2024 - Written by John Cameron

STORY LINK Pound Sterling Today: GBP Steady in Wake of BoE Governor Bailey Comments

The Pound to US Dollar (GBP/USD) exchange rate saw limited movement on Tuesday, with the pairing trading at its highest level since March 2022.

At the time of writing, GBP/USD was at around $1.3363, reflecting little change from Tuesday’s opening levels.

Pound (GBP) Stagnant Following Bailey’s Cautious Outlook

The Pound (GBP) remained relatively flat on Tuesday, as investors reacted to comments from Bank of England (BoE) Governor Andrew Bailey.

In an interview with KentOnline, Bailey discussed the future of UK interest rates and suggested rates will fall gradually.

Bailey’s remarks reaffirmed expectations that the BoE will take a slower path in unwinding its monetary tightening compared to other central banks.

Despite this fairly hawkish tone, Bailey’s optimism about the BoE’s progress in controlling inflation bolstered expectations for a potential quarter-point rate cut in November, limiting any significant upside for Sterling.

Additionally, Bailey addressed Brexit’s economic impact, warning of short-term trade disruptions that could further weigh on the Pound.

US Dollar (USD) Pressured by Improved Market Sentiment

The US Dollar (USD) struggled to gain traction on Tuesday, as the market’s risk-on sentiment reduced demand for the safe-haven currency.

Optimism was fuelled by China’s announcement of new stimulus measures aimed at stabilising its economy, which improved global risk appetite.

Moreover, expectations of aggressive interest rate cuts by the Federal Reserve in November continued to dampen the appeal of the US Dollar.

Looking ahead, the lack of significant UK or US economic data on Wednesday may limit further movement in the GBP/USD exchange rate.

However, the release of final US GDP data for the second quarter on Thursday could be a key driver for the US Dollar. Analysts anticipate the report will confirm a 3% growth rate, which may bolster the currency.

In the meantime, attention will also turn to UK Prime Minister Keir Starmer’s speech at the Labour Party conference, with Sterling potentially reacting to the tone and economic outlook outlined by the PM.

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TAGS: Pound Dollar Forecasts