Pound US Dollar Exchange Rate News: GBP/USD Subdued amid ‘Trump Trade’

October 24, 2024 - Written by John Cameron

STORY LINK Pound US Dollar Exchange Rate News: GBP/USD Subdued amid ‘Trump Trade’

The Pound US Dollar exchange rate trended mostly flat on Wednesday as both UK and US data releases were thin on the ground.

At the time of writing, GBP/USD was trading at approximately $1.2975, virtually unchanged from the start of Wednesday’s session.

The US Dollar (USD) strengthened against most of its peers on Wednesday, buoyed by a sense of market caution and 'Trump trade.'

Market participants factored in a greater than 60% chance of former President Donald Trump winning a second term in this year’s upcoming election. This lent support to the US Dollar, with traders foreseeing possible tax cuts that could make it more
challenging for the Federal Reserve to implement further interest rate reductions.

Moreover, the US dollar drew additional support from risk-off sentiment, as investors sought refuge in the safe-haven currency.

The Pound (GBP) was rangebound against most of its counterparts on Wednesday, struggling to find a clear direction amid a lack of notable domestic data releases.

However, Tuesday's public borrowing figures continued to weigh on the minds of GBP investors.

The Office for Budget Responsibility (OBR) announced that UK public borrowing exceeded forecasts, rising from £13.5bn to £16.6bn, well above the projected £10.3bn.

This fuelled existing concerns about the UK Chancellor's forthcoming Autumn Budget, consequently dampening the appeal of Sterling.

Looking forward, the US dollar might encounter fresh selling pressure on Thursday when the newest US PMI numbers are released.

The data is expected to be mixed, with the manufacturing sector likely to stay in contraction (a reading under 50), while the services sector is projected to remain in expansion (a reading over 50).

If the data meets these predictions, the USD could lose ground against other currencies on Thursday.

Turning to the Pound, Sterling is set to gain strength tomorrow as the UK unveils its October PMI data.

If the latest services index shows that the sector not only stayed in expansion but also gathered pace this month, GBP exchange rates could climb towards the end of the week. Likewise, the UK's manufacturing index is also expected to remain in
expansion, which could further bolster Sterling if the data aligns with expectations.

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TAGS: Pound Dollar Forecasts