USD/GBP Outlook:
The USD/GBP exchange rate is likely to move sideways, trading near its recent average and within the mid-range of the past three months. Geopolitical tensions are keeping demand for the USD steady, but the outlook for the GBP remains uncertain.
Key drivers:
• Rate gap: The Federal Reserve's interest rate policies have supported the USD, while the Bank of England shows signs of potential cuts.
• Risk/commodities: As geopolitical risks rise, the USD is being favored as a safe-haven asset, putting pressure on the GBP.
• One macro factor: Ongoing political uncertainty in the UK, particularly surrounding the Labour leadership, is causing volatility in the GBP.
Range:
The USD/GBP will likely hold within its recent 3-month range as external factors influence neither currency strongly enough to drive significant movement.
What could change it:
• Upside risk: A stronger-than-expected US producer price index could boost the USD further.
• Downside risk: A loss for Labour in the by-election could destabilize GBP and prompt further declines.