USD/GBP Outlook:
Bearish, as the rate is currently below its 90-day average and near recent lows, pressured by weak U.S. retail sales and geopolitical tensions.
Key drivers:
• Rate gap: The Federal Reserve's decision to maintain interest rates reflects caution, contrasting with the Bank of England's dovish stance amid mixed economic signals.
• Risk/commodities: Ongoing geopolitical tensions, particularly regarding U.S. trade policies, have led to a cautious market approach and have negatively impacted the dollar.
• One macro factor: The UK’s recent retail sales growth suggests some resilience in consumer spending, providing a slight buffer for the pound amidst political uncertainties.
Range:
USD/GBP is expected to drift within its recent range, given its current downward position.
What could change it:
• Upside risk: A surprise improvement in U.S. non-farm payroll figures could support the dollar.
• Downside risk: Further negative developments in U.S. economic data or renewed geopolitical tensions could weaken the USD further.
