The USD/GBP exchange rate is currently range-bound.
Key drivers include the interest rate differential, with the Federal Reserve expected to cut rates more aggressively soon while the Bank of England aims for gradual reductions. This divergence puts downward pressure on the dollar. Also, improving global economic growth contributes to USD volatility, while the UK’s slowing inflation and anticipated interest cuts raise concerns about the pound's stability.
In the near term, the USD/GBP is likely to trade within a stable range surrounding current levels, reflecting recent stability despite fluctuations.
An upside risk could arise from unexpected U.S. economic data that suggests stronger growth, potentially boosting the dollar. Conversely, if the Bank of England signals a sharper policy shift or concerns over fiscal stability worsen, the pound may weaken further.