– Written by
Ben Hughes
STORY LINK GBP/USD Forecast: Pound Sterling Dips as Trump Comments Slow Dollar Slide
The Pound to US Dollar exchange rate (GBP/USD) edged lower during Wednesday’s European session, easing after briefly touching its strongest levels in nearly four years.
At the time of writing, GBP/USD was trading close to $1.3786, down roughly 0.4% from the start of the day’s trade.
After tumbling to fresh multi-year lows late on Tuesday, the US Dollar (USD) found some footing on Wednesday, recovering a fraction of its recent losses.
The greenback has faced sustained selling pressure over the past ten days, shedding around 3% since mid-January. Confidence in the currency has been undermined by ongoing uncertainty surrounding US trade, foreign and economic policy.
Losses deepened overnight after President Donald Trump appeared to welcome the Dollar’s decline, describing the move as ‘great’ and suggesting the currency should be allowed to ‘find its own level’.
By Wednesday morning, however, some USD investors began to reassess positions as attention shifted to the Federal Reserve’s upcoming interest rate decision.
While no change in policy is expected from the Fed at its first meeting of the year, the prospect of firmer guidance was enough to lend the Dollar some modest support.
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The Pound (GBP) struggled to hold its ground against most major counterparts on Wednesday.
With no significant UK economic releases on the calendar, Sterling found itself short of fresh drivers, leaving it vulnerable to shifts in broader market sentiment.
Adding to the pressure, expectations for Bank of England (BoE) interest rates were nudged slightly lower, despite a run of stronger-than-forecast UK data releases last week.
GBP/USD Forecast: Political Deadlock to Weigh on the Dollar?
As the week progresses, the Pound to US Dollar exchange rate could regain upward momentum if political risks in Washington intensify.
Ongoing disputes between Senate Democrats and Republicans over Department of Homeland Security funding mean a partial government shutdown appears increasingly likely when current funding expires on Saturday. Such concerns are continuing to inflate the US Dollar’s risk premium.
Meanwhile, with the UK data calendar remaining thin, movements in Sterling are likely to stay closely tied to wider global market dynamics.
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TAGS: Pound Dollar Forecasts
