Pound US Dollar GBP/USD Exchange Rate Edges Up on Market Optimism

December 6, 2024 - Written by John Cameron

STORY LINK Pound US Dollar GBP/USD Exchange Rate Edges Up on Market Optimism

The Pound US Dollar (GBP/USD) exchange rate posted modest gains on Thursday as a cautiously upbeat mood boosted the currency pair.

The Pound (GBP) traded without clear direction on Thursday, lacking impetus due to an absence of UK economic data. However, the increasingly risk-sensitive currency managed modest gains against its safer counterparts, buoyed by a broadly positive market mood.

Investor sentiment showed cautious optimism despite persistent geopolitical and economic uncertainties. The ceasefire in Lebanon – while fragile – remained intact, and tensions between Russia and the West appeared to have eased.

Adding to the optimism, major central banks are anticipated to continue cutting interest rates in 2025, fostering hopes of a recovery in global economic growth.

The safe-haven US Dollar (USD) faced pressure on Thursday as an upbeat market mood sapped demand for the currency.

Lingering weakness from Wednesday’s disappointing ISM services PMI data further weighed on USD. The index fell short of expectations, highlighting an unexpected slowdown in the US service sector.

However, a modest rebound in US Treasury yields provided some support, preventing the Dollar from suffering significant losses. This recovery followed comments from Federal Reserve Chair Jerome Powell, who signalled on Wednesday evening that the Fed was in no hurry to cut interest rates. Powell cited strong economic growth, a resilient labour market, and persistent inflation as reasons to maintain a cautious approach.

GBP/USD Outlook: Non-Farm Payrolls in the Spotlight

Friday’s trading will centre on the latest US employment figures, with the non-farm payrolls report and unemployment rate set to draw significant attention.

Economists predict that non-farm payrolls will recover strongly, rising to 200,000 in November after October’s shockingly low increase of just 12,000. A rebound of this magnitude could provide support for the US Dollar.

However, the unemployment rate is expected to edge up slightly from 4.1% to 4.2%, which may temper the ‘Greenback’s’ gains.

Meanwhile, the Pound could remain subdued heading into the weekend, with no major UK economic data on the calendar to drive significant movement.

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TAGS: Pound Dollar Forecasts