The GBP to USD exchange rate shows a bullish bias after the Bank of England's recent hawkish signals hinting at slower rate cuts.
Key drivers include the interest rate differential, with the Bank of England transitioning cautiously away from low rates, while the Federal Reserve is expected to cut rates more significantly by mid-2026. Additionally, the UK’s retail sales figures, if positive, could support GBP further. Economic growth projections indicate a slowdown in both the UK and the US, but the Fed's gradual approach to monetary easing may weaken the USD more significantly.
In the near term, the GBP/USD pair is expected to remain within a stable range above its recent 7-day lows, reflecting a market that is already accustomed to fluctuations around this level. Upside risk could come from stronger-than-expected economic data from the UK, while a sharp downturn in the US economy might lead to a more aggressive Fed response, amplifying downward pressure on the GBP.
