Pound US Dollar Exchange Rate News: GBP/USD Fluctuates ahead of High-Impact Events

October 29, 2024 - Written by Ben Hughes

STORY LINK Pound US Dollar Exchange Rate News: GBP/USD Fluctuates ahead of High-Impact Events

The Pound US Dollar (GBP/USD) exchange rate fluctuated on Tuesday as markets braced for high-impact events later in the week.

At the time of writing, GBP/USD traded at $1.2972, having wavered in a narrow range during the session.

The Pound (GBP) found support against its weaker counterparts on Tuesday, though it faced resistance in its attempt to rise against the US Dollar (USD). Investors remained tentatively optimistic as they awaited the UK Autumn Budget announcement scheduled for Wednesday.

Chancellor Rachel Reeves is set to change the government’s fiscal rules, potentially freeing up to £50bn in additional spending. Hopes that she might use this leeway to borrow for investment have helped alleviate concerns about impending tax increases.

As a result, Sterling strengthened on Tuesday, but lingering caution ahead of the budget announcement kept the Pound's gains in check.

The safe-haven US Dollar fluctuated on Tuesday, reflecting a mixed market sentiment that left the currency directionless.

Investors were also reluctant to make bold moves on the 'Greenback' ahead of significant US economic data scheduled for later in the week.

With the upcoming releases of third-quarter GDP, the core PCE price index – a key inflation measure for the Federal Reserve – and the crucial non-farm payrolls report, investors were cautious about adjusting their positions in the US currency. These high-impact releases could potentially influence the Fed's monetary policy decisions.

The Pound US Dollar exchange rate may see significant fluctuations throughout the latter half of the week.

On Wednesday, the UK Autumn Budget will be the main focus for GBP investors. The Pound could gain strength if markets respond positively to a balanced budget that boosts investment spending while raising taxes to cover everyday expenditure. However, an unfavourable reaction to the budget could send Sterling lower, with either scenario likely to spark volatility.

Meanwhile, robust US GDP growth in the third quarter could drive the US Dollar higher in midweek trading.

Thursday brings the latest US core PCE price index. If this key inflation metric indicates that price pressures continued to ease in September, the US Dollar could falter.

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TAGS: Pound Dollar Forecasts