Pound to Dollar Rate Strengthens Amid Market Optimism - GBP/USD News

October 1, 2024 - Written by John Cameron

STORY LINK Pound to Dollar Rate Strengthens Amid Market Optimism - GBP/USD News

The Pound to US Dollar (GBP/USD) exchange rate maintained a positive trajectory at the start of this week, with the pairing nearing its highest level since February 2021.

At the time of writing, GBP/USD was trading around $1.3421. Up approximately 0.4% from Monday’s opening levels.

The US Dollar (USD) struggled to attract support on Monday as a cautiously optimistic market mood reduced demand for the safe-haven currency.

The positive market outlook was supported by a sharp increase in Chinese stocks, driven by hopes that recent stimulus efforts by Beijing will help to revive the world’s second-largest economy.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, remarked: ‘

Chinese markets are rallying as the expectation builds that the substantial measures from the central bank will reinvigorate the economy.’

Additionally, the possibility of another substantial interest rate cut from the Federal Reserve in November helped buoy risk sentiment.

However, the USD managed to limit its losses ahead of a speech by Fed Chair Jerome Powell on Monday afternoon, which could impact expectations for future rate cuts.

While the Pound (GBP) made gains against the softer US Dollar, the advance was tempered by a revision to the UK’s GDP data for the second quarter.

The Office for National Statistics (ONS) revealed that the UK economy grew by 0.5% in Q2, a decrease from 0.7% in Q1 and down from the 0.6% previously estimated.

Despite growth missing expectations, the downside in the Pound was limited amid the continued improvement in the UK’s economic outlook.

Looking ahead, a couple of notable US economic releases may infuse some volatility in the Pound to US Dollar exchange rate on Tuesday.

The focus will likely be on the US JOLTS job openings report, with the US Dollar set to weaken if the data reports a further cooling of the labour market in August.

Additionally, the ISM manufacturing PMI could add pressure to the USD if it shows the US manufacturing sector continued to contract in September.

In the meantime, the UK’s finalised manufacturing PMI could weigh on the Pound if it confirms a factory activity slowed last month.

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TAGS: Dollar Pound Forecasts