Pound US Dollar (GBP/USD) Exchange Rate Slides as Republicans Gain Control of Congress

November 17, 2024 - Written by Frank Davies

STORY LINK Pound US Dollar (GBP/USD) Exchange Rate Slides as Republicans Gain Control of Congress

The Pound to US Dollar (GBP/USD) exchange rate dropped to a new multi-month low on Thursday as investor demand for the USD remained strong.

At the time of writing, GBP/USD was trading around $1.2644, down approximately 0.5% from Thursday’s opening levels.

The US Dollar (USD) climbed on Thursday, continuing its upward trend following Donald Trump’s election win.

The recent boost in USD came as Republicans secured a majority in the House of Representatives, granting the party control of all branches of the US government.

With Trump now poised to advance his economic policies more easily, USD exchange rates rose as investors anticipate his tax cuts and tariffs may fuel inflation, potentially leading the Federal Reserve to keep US interest rates elevated for longer.

The Pound (GBP) struggled to gain traction against the US Dollar on Thursday, as GBP investors remained cautious ahead of a speech from Bank of England (BoE) Governor Andrew Bailey.

Bailey’s comments will follow recent remarks by BoE official Catherine Mann, who discussed the risks of rising inflation in the UK and suggested rates might need to remain high.

If Bailey echoes this sentiment, it could dampen market expectations of a BoE rate cut in December and help the GBP/USD exchange rate recover from its current lows.

GBP/USD Forecast: Slowing UK GDP to Pressure the Pound?

Looking toward the end of the week, the Pound to US Dollar (GBP/USD) exchange rate may face further headwinds with the release of the UK’s latest GDP figures.

Preliminary data for the third quarter is expected to show that UK economic growth slowed from 0.5% to just 0.2%, raising concerns about the country’s economic outlook and likely weighing on Sterling.

Meanwhile, the release of US retail sales data could limit the US Dollar’s recent gains if the figures indicate a slowdown in consumer spending last month.

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