The Pound US Dollar (GBP/USD) exchange rate wavered on Thursday as markets weighed the UK’s stronger-than-expected GDP figures against lingering doubts over the economy’s underlying strength.
Pound to Dollar (GBP/USD): 1.33924 (-0.35%)
Euro to Dollar (EUR/USD): 1.16126 (-0.28%)
Dollar to Japanese Yen (USD/JPY): 158.468 (+0.01%)
DAILY RECAP:
The Pound (GBP) struggled to hold onto early gains on Thursday after an initial lift from the UK’s latest GDP figures faded.
Data published by the Office for National Statistics showed the UK economy expanded by 0.3% in November, rebounding from October’s 0.1% contraction and beating expectations for a modest 0.1% rise.
While the stronger print briefly buoyed Sterling, the rally proved short-lived. Investors remained cautious as the data marked the first expansion since June and largely reversed earlier losses rather than signalling a clear recovery.
Analysts also flagged that November’s growth was flattered by one-off factors, including a sharp rebound in car production as Jaguar Land Rover recovered from a cyber-attack. As these caveats were absorbed, the Pound drifted lower.
Sterling’s retreat gathered pace later in the session, with GBP/USD sliding toward the 1.3370 level as the US Dollar rallied strongly.
The US Dollar (USD) surged after a run of stronger-than-expected US economic data, with initial jobless claims falling and factory surveys beating forecasts. The upbeat releases helped ease concerns over a sharp slowdown in the US economy and prompted investors to scale back near-term Federal Reserve rate cut bets.
As a result, GBP/USD dropped more than 0.5% on the day, with the Dollar’s broad-based advance overwhelming support from the earlier UK GDP surprise.
Near-Term GBP/USD Forecast: Dovish Fed Rhetoric to Pressure the Dollar?
Looking ahead to Friday, attention turns to the latest US industrial production figures. Output growth is forecast to slow to just 0.1% in December, which could apply some pressure to the US Dollar.
Later in the session, comments from Federal Reserve policymakers Michelle Bowman and Philip Jefferson will also be in focus. Both are viewed as relatively dovish, and any remarks signalling comfort with further policy easing could weigh on USD.
In the absence of further UK data, movement in GBP/USD is likely to be driven by US developments and broader market sentiment. An improvement in risk appetite could support the increasingly risk-sensitive Pound, while a cautious tone may continue to favour the Dollar.
