The USD to GBP exchange rate is currently biased towards stability, having recently risen to 14-day highs near 0.7443.
Key drivers include the anticipated Federal Reserve interest rate cuts, which may weaken the USD in the near term. In contrast, the Bank of England is also facing pressure to lower rates, which could soften the GBP. Additionally, improving global economic growth may lend some support to both currencies as commodity prices rise.
In the near term, the exchange rate is likely to remain within a stable range, trading close to recent highs but not straying far from its 3-month average.
An upside risk could arise from stronger-than-expected economic growth or inflation data, which might lead the Fed to reconsider its rate cut strategy. Conversely, a downside risk exists if the UK faces heightened fiscal concerns or a sharper economic slowdown, further pressuring the GBP.