USD/GBP Outlook: The outlook for USD/GBP appears slightly weaker, as the rate is below its recent average and near recent lows, impacted by ongoing concerns over U.S. policy and economic stability.
Key drivers:
- Rate gap: The Federal Reserve is expected to signal rate cuts, while the Bank of England remains cautious, creating a divergence that weighs on the USD.
- Risk/commodities: The U.S. faces geopolitical tensions, including airstrikes in Venezuela, adding to uncertainty surrounding the dollar’s value.
- Macro factor: The UK's stagnant GDP growth projections further complicate the pound's trajectory, keeping it under pressure.
Range: USD/GBP is likely to drift within its recent range, lacking major drivers that could push it toward extremes.
What could change it:
- Upside risk: A surprise announcement from the Federal Reserve indicating a more hawkish stance could boost the USD.
- Downside risk: Continued concerns over U.S. tariffs and government instability could further weaken the dollar’s position against the pound.
