The Pound to Dollar (GBP/USD) exchange rate edged higher on Wednesday, supported by improved market sentiment as developments in the Middle East helped ease safe-haven demand for the US Dollar.
Pound to Dollar (GBP/USD): 1.35076 (-0.02%)
Euro to Dollar (EUR/USD): 1.17105 (-0.29%)
Dollar to Japanese Yen (USD/JPY): 159.4715 (+0.06%)
DAILY RECAP:
The US Dollar (USD) softened through midweek trade as a modest improvement in global risk appetite reduced demand for the safe-haven currency.
Markets reacted to news that US President Donald Trump had announced a unilateral extension of the ceasefire with Iran, helping to calm immediate fears of escalation.
However, USD losses remained contained.
Uncertainty persists, with the US maintaining a naval blockade and Iran yet to formally endorse the ceasefire extension, keeping investors cautious.
Meanwhile, the Pound (GBP) traded in a relatively narrow range.
Sterling found some support against the weaker US Dollar but struggled to gain broader traction following the UK’s latest inflation release.
Headline CPI rose from 3% to 3.3% in March, in line with expectations and largely driven by higher energy prices.
However, core inflation edged lower, signalling that underlying price pressures may be easing.
This mixed signal reinforced expectations that the Bank of England will adopt a cautious, wait-and-see approach to monetary policy, limiting any significant upside for Sterling.
GBP/USD Exchange Rate Forecast: Underwhelming UK PMIs to Drag on Sterling?
Looking ahead, the UK’s preliminary PMI figures will be a key focus.
If April’s data points to a contraction in private sector activity, Sterling could face renewed pressure.
For the US Dollar, broader market sentiment is likely to remain the dominant driver.
Further progress towards a sustained ceasefire in the Middle East may weigh on USD by encouraging risk-taking.
Conversely, any renewed tensions could revive safe-haven demand and lift the ‘Greenback’.
