The Pound-Dollar rate could rebound if US consumer confidence weakens, although persistent risk aversion may keep the safe-haven Dollar supported.
The Pound US Dollar (GBP/USD) exchange rate slipped to a six-day low on Thursday before bouncing back as volatile bond markets impacted the pairing.
At the time of writing, GBP/USD was trading at $1.3226, up marginally on the day.
Pound to Dollar (GBP/USD): 1.3229 (+0.12%)
Dollar to Yen (USD/JPY): 157.87288 (-0.14%)
DAILY RECAP:
The Pound (GBP) struggled to establish a clear direction on Thursday, with a quiet UK economic calendar leaving Sterling vulnerable to broader market movements.
The Pound moved erratically as UK gilt yields climbed to multi-year highs before easing back from their peaks. The initial jump in borrowing costs unsettled GBP, as higher government financing costs added to the challenges facing the Treasury ahead of the Autumn Budget.
However, the subsequent retreat in gilt yields helped calm some of those concerns, allowing the Pound to recover its earlier losses.
Meanwhile, the US Dollar (USD) was also mixed on Thursday as a shifting market mood left USD without a clear directional bias.
The currency initially firmed amid a deterioration in market sentiment. Risk appetite took a hit as oil prices climbed again following recent attacks on oil tankers in the Strait of Hormuz. At the same time, energy companies in the US shut down some offshore oil and gas platforms in the Gulf of Mexico as an approaching hurricane raised operational risks.
Expectations for higher interest rates around the world added to the pressure on sentiment, while reports that some major tech companies are seeking to raise billions of Dollars through debt also unsettled markets.
However, the market mood improved slightly as the session went on, prompting USD to relinquish its gains.
Near-Term GBP/USD Forecast: US Consumer Confidence in Focus
Looking forward, the key data release on Friday will be the latest US consumer sentiment index from the University of Michigan.
Markets expect US household morale to have deteriorated to 47.6 in October, which would be its third consecutive decline and its weakest reading since May. If the data prints as forecast, the ‘Greenback’ may face headwinds.
Meanwhile, market risk appetite will likely continue to play a part in the safe-haven US Dollar’s direction. If investors remain risk averse, the ‘Greenback’ could attract support.
Our currency coverage draws on live market data, official economic releases and published bank research.
