Pound US Dollar GBP/USD Exchange Rate Dips Amid Market Caution

December 1, 2024 - Written by Tim Boyer

STORY LINK Pound US Dollar GBP/USD Exchange Rate Dips Amid Market Caution

The Pound to US Dollar (GBP/USD) exchange rate weakened on Thursday as global market sentiment turned cautious.

The US Dollar (USD) found support on Thursday as investors favoured the safe-haven currency amid ongoing market uncertainty.

Concerns over President-elect Donald Trump’s aggressive trade policies weighed on risk appetite.

Trump recently reignited fears of a global trade war by announcing his intention to impose tariffs on imports from China, Mexico, and Canada immediately after taking office.

These plans have heightened fears of a global economic slowdown, driving demand for the US Dollar.

Additionally, fading expectations for Federal Reserve rate cuts in early 2025 provided further support for the Greenback.

However, the Thanksgiving holiday in the US limited trading activity, ultimately capping the US Dollar’s gains.

The Pound (GBP) remained under pressure on Thursday, with a lack of notable UK economic data leaving Sterling vulnerable.

Investors continue to worry about the UK’s economic outlook, as recent data points to a sharp slowdown in activity during the second half of 2024.

Particularly troubling were the UK’s latest PMI figures, which revealed that private sector activity contracted for the first time in a year.

GBP/USD Exchange Rate Forecast: Risk Aversion to Support the US Dollar?

Heading into the end of the week, the Pound to US Dollar (GBP/USD) exchange rate is likely to remain influenced by overall market sentiment.

If risk aversion persists, it could bolster demand for the safe-haven US Dollar, potentially extending the US Dollar’s recovery.

Meanwhile, Sterling may be impacted by the Bank of England’s latest Financial Stability Report, due on Friday. Any indications of further economic vulnerabilities in the UK could weigh on the Pound.

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TAGS: Pound Dollar Forecasts