USD to GBP Outlook
In the near term, USD/GBP is likely to move sideways trading close to its 90-day average and mid-range, with the US dollar supported by safe-haven demand driven by escalating Middle East tensions. The ongoing geopolitical concerns are likely to keep the US dollar relatively firm, but recent stability in the exchange rate suggests.
Key drivers
- Rate gap: The US Federal Reserve has paused rate hikes while the Bank of England maintains a cautious stance, keeping the US dollar supported.
- Risk/commodities: Rising oil prices due to the Strait of Hormuz disruptions increase global USD demand, reinforcing safe-haven flows.
- One macro factor: The US dollar is benefiting from heightened geopolitical risk, with safe-haven inflows unchanged.
What could change it
- Upside risk: A de-escalation of Middle East tensions could diminish safe-haven demand for the USD, supporting the pound.
- Downside risk: Sustained oil price surges or worsening geopolitical conflicts may strengthen the US dollar further, putting downward pressure on GBP/USD.