The GBP to USD exchange rate is currently range-bound.
Key drivers include a divergence in interest rate policies, as the Bank of England is expected to cut rates to 3.25% due to slowing inflation, while the Federal Reserve's rate cuts will be more gradual. Additionally, concerns about UK fiscal policy may pressure the pound as trade relations with the U.S. slow down due to tariffs. Economic growth in the UK is also projected to decelerate.
In the near term, the GBP/USD pair is likely to trade within a stable range, reflecting current dynamics in interest rates and economic forecasts.
An upside risk could stem from any unexpected hawkish signals from the Bank of England regarding future rate policies. Conversely, a downside risk might arise if the Fed's data releases indicate stronger-than-expected U.S. economic performance and a more aggressive monetary policy stance.
