Pound-Dollar News: GBP/USD Flat despite Downbeat Market Mood

October 23, 2024 - Written by John Cameron

STORY LINK Pound-Dollar News: GBP/USD Flat despite Downbeat Market Mood

The Pound US Dollar exchange rate traded water on Tuesday despite an anxious market mood undermining the currency pairing.

At the time of writing, GBP/USD was trading at approximately $1.2978, virtually unchanged from the start of Monday’s session.

Pound (GBP) Hobbled by Autumn Budget Concerns

The Pound (GBP) faced challenges in attracting investors on Tuesday as the absence of UK data releases and increasing worries about the UK's forthcoming Autumn Budget hindered GBP exchange rates.

On Tuesday, the UK released its latest public borrowing figures, which showed that public sector borrowing significantly exceeded expectations, climbing from £13.5bn to £16.6bn, well above the predicted £10.3bn.

This fuelled concerns about the UK Chancellor's upcoming Autumn Budget at the end of the month, dampening Sterling sentiment throughout the day.

US Dollar (USD) Supported by Downbeat Trade

The US Dollar (USD) found support on Tuesday even with no US economic data releases on the calendar.

The currency's gains were primarily driven by a shift towards safer assets, as risk-off sentiment prevailed among investors.

Persistent Middle East tensions, with Israel's strike on Iran appearing increasingly likely, rattled markets and boosted the safe-haven appeal of the US Dollar.

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

Looking forward, the main driver of the Pound US Dollar exchange rate on Wednesday is expected to be risk appetite, given the absence of economic data releases from both the UK and US.

If Tuesday's nervous market sentiment carries over, GBP/USD may continue to struggle due to the UK's heightened sensitivity to risk.

Conversely, if market optimism picks up during mid-week trading, GBP/USD could start to rise, as investors may move away from the safe-haven US Dollar.

USD exchange rates could also be influenced by a forthcoming speech from a Federal Reserve official scheduled for Wednesday afternoon.

With market expectations for Federal Reserve interest rate cuts in flux, any dovish signals could intensify rate cut bets and potentially put pressure on the US Dollar.

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TAGS: Pound Dollar Forecasts