Pound US Dollar (GBP/USD) Exchange Rate Bolstered by Cheery Trading Conditions

December 10, 2024 - Written by David Woodsmith

STORY LINK Pound US Dollar (GBP/USD) Exchange Rate Bolstered by Cheery Trading Conditions

The Pound US Dollar exchange rate edged higher on Monday as an upbeat market mood lifted the currency pairing.

At the start of the week, the US Dollar (USD) declined against most of its peers, and fell by about 0.8% against the Australian Dollar (AUD) and the South African Rand (ZAR) as the American currency was significantly weakened by the optimistic trading conditions on Monday.

As a prominent safe-haven currency, the ‘Greenback' faced challenges as investors favored riskier assets over safer currencies.

Additionally, the absence of any domestic data releases on Monday left USD exchange rates exposed to market sentiment, which weighed on the currency.

The Pound (GBP) gained strength against several currencies on Monday even in the absence of any UK data releases.

This was largely attributed to the positive trading conditions at the start of the week, which offered some support to the British currency.

Given its sensitivity to changes in risk sentiment, the Pound benefited from the upbeat market mood on Monday.

However, with limited additional factors to drive momentum, the Pound's gains were modest, showing more significant strength against safer currencies rather than riskier ones.

GBP/USD Exchange Rate Forecast: US Data in the Spotlight

Looking ahead, the main driver of movement for the Pound US Dollar exchange rate will likely be the release of the latest US Consumer Price Index (CPI) on Wednesday, given that there are no significant economic reports scheduled for Tuesday.

Economists predict that the US’s core inflation rate will rise slightly from 2.6% to 2.7%, while the overall inflation rate is expected to remain at 3.3%. If the data aligns with these forecasts, it could strengthen the US Dollar, particularly if the numbers reduce the likelihood of interest rate cuts by the Federal Reserve.

For the Pound, the UK economic calendar is relatively quiet this week, so GBP exchange rates will likely be swayed more by broader market sentiment.

If the positive market conditions seen on Monday persist, the Pound could gain some support this week.

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TAGS: Pound Dollar Forecasts