The USD to GBP exchange rate currently leans bearish, but with stable fluctuations.
Key drivers include:
- The Federal Reserve is expected to cut rates as the US economy adjusts, while the Bank of England is cautious about further cuts, maintaining relative stability in the interest rate differential.
- Recent US labor data showing a drop in unemployment suggests a resilient USD, while the UK's growth projections show signs of stagnation, contributing to pressure on the GBP.
The expected near-term trading range suggests limited movement, as the pair hovers around recent highs and remains within a stable 4% range.
An upside risk for USD includes stronger-than-expected employment data, potentially delaying Fed rate cuts. Conversely, a downside risk could arise if UK economic data surprises to the upside, boosting confidence in the GBP against the USD.
