Pound US Dollar Exchange Rate News: GBP/USD Holds Steady amid Market Uncertainty

December 11, 2024 - Written by Tim Boyer

STORY LINK Pound US Dollar Exchange Rate News: GBP/USD Holds Steady amid Market Uncertainty

At the time of writing, GBP/USD was trading at approximately $1.2748. Virtually unchanged from Tuesday’s opening levels.

The US Dollar (USD) saw muted movement on Tuesday, but having bounced back from its early-week losses.

Market risk appetite improved on Monday amid speculation about new stimulus measures from China’s government, leading to an initial drop in USD demand.

However, the US Dollar subsequently regained ground and held steady at the start of Tuesday’s European trading session as doubts grew over whether Beijing would follow through with significant economic support,

Even so, the Greenback’s upside was capped by expectations of a Federal Reserve interest rate cut next month.

The Pound (GBP) also struggled to generate momentum on Tuesday due to a lack of significant UK economic data.

GBP investors also appeared hesitant to take strong positions ahead of the Bank of England’s (BoE) policy meeting next week.

While the BoE is widely expected to keep interest rates unchanged at its final meeting of 2024, uncertainty surrounding its economic outlook and future rate plans left investors cautious.

GBP/USD Exchange Rate Forecast: Higher US Inflation to Strengthen the Dollar?

Looking ahead, the GBP/USD exchange rate may face renewed pressure on Wednesday with the release of the US consumer price index.

November’s CPI figures are forecast to show that inflation accelerated for the second consecutive month, climbing to a four-month high.

Although this is unlikely to dissuade markets from expecting a December rate cut from the Fed, it may prompt USD investors to reassess their expectations for additional rate cuts in 2025, potentially boosting the US Dollar.

Conversely, if inflation data falls below expectations, the likelihood of further Fed rate cuts could increase, pulling the Greenback lower.

Meanwhile, the UK’s latest GDP figures could lend some support to the Pound later in the week if the data indicates that economic growth rebounded in October.

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TAGS: Pound Dollar Forecasts