Pound US Dollar (GBP/USD) Exchange Rate Undermined by Anxious Market Mood

October 22, 2024 - Written by John Cameron

STORY LINK Pound US Dollar (GBP/USD) Exchange Rate Undermined by Anxious Market Mood

The Pound US Dollar exchange rate ticked lower on Monday as a safe-haven dash undermined the currency pairing.

At the time of writing, GBP/USD was trading at approximately $1.3018, down roughly 0.2% from the start of Monday’s session.

US Dollar (USD) Supported by Downbeat Trade

The US Dollar (USD) captured investors focus on Monday even with no significant US data releases on the calendar.

The 'Greenback' drew strength from the day's market sentiment, as investors sought refuge in safer assets like the US Dollar.

With Middle East tensions on the rise, fueled by overnight intensification of Israel's actions in Gaza and Lebanon, a flight to safety bolstered USD exchange rates at the week's start.

Pound (GBP) Muted amid Data Lull

The Pound (GBP) traded mostly sideways on Monday, with its momentum dampened by the absence of domestic data at the start of the week.

With no economic data to guide it, the Pound's movement was primarily driven by investors' appetite for risk.

As a currency increasingly sensitive to risk, the GBP maintained its ground against safer currencies, even in the face of less-than-favorable trading conditions and the lack of economic drivers.

GBP/USD Exchange Rate Forecast: Risk Appetite to Remain in the Spotlight?

Looking forward, the main driver of the Pound US Dollar exchange rate on Tuesday will likely remain with risk appetite, given the absence of UK or US economic data releases.

If market caution persists, GBP/USD may continue to slide, with the Pound's growing risk sensitivity and the US Dollar's safe-haven appeal influencing the trend.

Conversely, if a risk-on sentiment dominates on Tuesday, GBP/USD could rebound and strengthen instead.

USD exchange rates may also react to an upcoming speech from a Federal Reserve official set for release on Tuesday.

Given the evolving expectations around Federal Reserve interest rate cuts, any hints of a dovish nature could amplify rate cut speculation and potentially weigh on the US Dollar as a result.

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TAGS: American Dollar Forecasts Pound Sterling Forecasts