The Pound-Dollar could remain under pressure if UK retail sales disappoint, while firmer US industrial output may offer the Dollar fresh support.
The Pound US Dollar (GBP/USD) exchange rate faced turbulence on Thursday as the US and UK central bank decisions infused markets with volatility.
At the time of writing, GBP/USD was trading at $1.3380, virtually unchanged on the day but having struck a seven-week low earlier in the session.
Pound to Dollar (GBP/USD): 1.335557 (-0.20%)
Dollar to Yen (USD/JPY): 155.9695 (-0.04%)
DAILY RECAP:
The US Dollar (USD) initially edged lower on Thursday, having struck a seven-week high against the Pound (GBP) on Wednesday evening in the wake of the Federal Reserve’s interest rate decision.
The Fed voted unanimously to raise rates for the first time since 2023, bringing the Fed funds rate to 4%.
While the hike was broadly expected, the unanimous decision and hawkish messaging from the Fed propelled USD higher.
Meanwhile, the Pound managed to crawl up from its multi-week lows on Thursday, although its upside was limited by the looming Bank of England (BoE) decision.
Sterling then faced volatility in the wake of the BoE’s announcement, plunging to a fresh multi-week low before recouping its losses.
The bank left interest rates unchanged, with policymakers voting six to three in favour of holding steady. While the decision was broadly as markets expected, it still lent slightly on the dovish side.
However, the BoE also sounded concerned about the upside inflation risks amid the ongoing war in Iran, so this limited GBP’s losses.
Near-Term GBP/USD Forecast: UK Sales Data to Dent the Pound?
Looking ahead, the UK’s latest retail sales data could shape Pound movement as the week draws to a close.
Economists are forecasting a 0.2% decline in sales growth for August, following a 0.5% contraction in July. Should the figures align with expectations, another fall in consumer spending could fuel concerns over the strength of the UK economy and put pressure on GBP.
Meanwhile, a modest rise in US industrial production in August could lend USD some support.
Risk appetite could also impact the GBP/USD exchange rate. If sentiment sours, the safe-haven Dollar could gain ground against the increasingly risk-sensitive Pound.
Our currency coverage draws on live market data, official economic releases and published bank research.
