Bias: range-bound, as the current GBP/USD is near the 90-day average and sits in the middle of the 3-month range.
Key drivers:
- Rate gap: The Bank of England is expected to cut rates cautiously while the Federal Reserve may implement one or two cuts, influencing the GBP/USD relationship.
- Risk/commodities: Recent oil price trends and geopolitical tensions are affecting risk appetite, which can impact the currencies differently, with the USD often strengthening in uncertain times.
- One macro factor: US unemployment has fallen unexpectedly, suggesting a resilient job market, which typically supports the USD against the GBP.
Range: The GBP/USD is likely to remain within its recent 3-month range, possibly holding steady with limited volatility.
What could change it:
- Upside risk: Strong UK economic recovery signals may rally the GBP.
- Downside risk: A more dovish tone from the Federal Reserve could weaken the USD.