Pound US Dollar Exchange Rate Falls to 1.335 as Risk-Off Sentiment Returns

September 26, 2024 - Written by John Cameron

STORY LINK Pound US Dollar Exchange Rate Falls to 1.335 as Risk-Off Sentiment Returns

The Pound US Dollar exchange slumped on Wednesday as markets returned to downbeat trading conditions, hobbling the currency pairing.

At the time of writing, GBP/USD was trading at approximately $1.3365 down roughly 0.4% from the start of Wednesday’s session.

Pound (GBP) Stymied by Risk-Off Flows

The Pound (GBP) struggled to attract investor interest on Wednesday and slumped against most of its peers as a shift to more cautious trading conditions weighed on Sterling sentiment.

Earlier in the week, the Pound had been buoyed by positive market conditions following the People’s Bank of China’s (PBoC) announcement of its largest stimulus package since the onset of Covid-19 in order to boost the Chinese economy.

However, by Wednesday, optimism around these measures faded, with concerns that they may have been excessive driving the speculation.

This led to a market reversal, prompting a move toward safer assets, which pressured GBP exchange rates on the back of its status as an increasingly risk-sensitive currency.

US Dollar (USD) Underpinned by Anxious Trade

The US Dollar (USD) strengthened against most major currencies on Wednesday as downbeat trading returned to the markets, boosting demand for the safe-haven 'Greenback'.

Diminishing optimism around China's economic stimulus measures helped the USD recover from a sluggish start earlier in the week.

Rising tensions in the Middle East further pushed investors away from riskier assets and towards safer currencies on Wednesday as Israel intensified its attack on Lebanon.

GBP/USD Exchange Rate: US Data in the Spotlight

Looking ahead, key US economic releases are expected to drive movement in the Pound to US Dollar exchange rate on Thursday.

The finalized US GDP figures for the second quarter of the year could provide modest support for the ‘Greenback’ if they meet expectations. However, expectations of a sharp decline in durable goods orders and a potential rise in initial jobless claims may limit any gains for USD.

Meanwhile, with little significant UK data scheduled for the rest of the week, the Pound is likely to follow broader risk sentiment. If Wednesday’s cautious market mood persists, Sterling may continue to struggle against its peers.

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