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Pound US Dollar Exchange Rate Forecast: BoE to Hold Rates in November on Economic Pessimism?

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GBP/USD Exchange Rate Choppy ahead of Interest Rate Decisions

The Pound US Dollar (GBP/USD) exchange rate has traded in a wide range today, amid shifting risk appetite. With investors now bracing for key interest rate decisions, movement remains volatile.

At the time of writing the GBP/USD exchange rate is trading at around $1.2129, down approximately 0.3% this morning’s opening rate.

US Dollar (USD) Volatile Ahead of Fed Interest Rate

The US Dollar (USD) looks to be in a position of strength once again as rapidly changing risk sentiment sweeps across global markets.

New developments in the Israel-Hamas conflict have sparked concerns of a wider regional fallout, as investors dash to the safe-haven US Dollar in anticipation of global market volatility.

The ‘Greenback’ could see a choppy week of trade ahead, with the Federal Reserve’s vital interest rate decision due on Wednesday. USD bets could falter on Wednesday, should the central bank confirm a widely anticipated interest rate hold at its imminent monetary policy meeting.

Though rates are expected to remain at 5.5%, a potentially hawkish hold could help the Fed achieve a ‘soft landing’, which could prevent drastic losses for the US Dollar.

October’s US non-farm payrolls on Friday may also significantly dent USD, following post interest rate movements. A forecast decline from 336,000 to 180,000 might see the ‘Greenback’ stumble amid signs of loosening in the labour market. Such a sharp decline could undermine recent speculations of an increasingly resilient US economy, potentially dampening investor confidence in USD. 

Finalised PMIs could limit potential losses for the US Dollar. Strong data is anticipated following last week’s preliminary readings, though should the data exceed expectations, USD may rally as the week draws to a close.

Pound (GBP) Fluctuates Ahead of BoE Monetary Policy Decision

The increasingly risk-sensitive Pound (GBP) retreated from its initial wins today, as the market mood soured, leaving the Pound exposed to UK economic pessimism.

Sterling could continue to endure mixed trade ahead of the Bank of England’s (BoE) looming interest rate decision, due on Thursday.

Continually bleak data readings and economic anxieties have saturated the UK in recent weeks, further denting already feeble rate hike bets. While UK teeters on the edge of a domestic recession, analysts and investors alike are anticipating a continued BoE rate hold.

Surmounting inflationary pressures and anxious investors could continue to pressure Sterling throughout the week, with potentially stagnant interest rates unlikely to support GBP.

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