GBP/USD Outlook:
Slightly positive, but likely to move sideways, as the rate is above its recent average and lacking a clear driver.
Key drivers:
• Rate gap: The Bank of England held interest rates steady at a more dovish stance, compared to the Federal Reserve maintaining its rates amid optimism about the U.S. economy.
• Risk/commodities: Recent trends in oil prices have not significantly influenced the GBP, reflecting broader economic conditions that keep the Pound under pressure.
• One macro factor: Political uncertainty in the UK continues to weigh on the Pound, even as the risk of an immediate leadership challenge to Prime Minister Keir Starmer has faded.
Range:
GBP/USD is expected to hold steady within its recent range, subject to economic data releases.
What could change it:
• Upside risk: A stronger-than-expected GDP report from the UK could boost the Pound.
• Downside risk: Ongoing geopolitical tensions and trade policy shifts impacting U.S. assets could further pressure the Dollar.
