The Pound to Dollar (GBP/USD) exchange rate edged lower on Wednesday as concerns over prolonged disruption to Middle East energy supplies supported the US Dollar.
At the time of writing, GBP/USD was trading around $1.3491, down close to 0.2% on the day.
Pound to Dollar (GBP/USD): 1.34943 (-0.22%)
Euro to Dollar (EUR/USD): 1.1698 (-0.17%)
Dollar to Japanese Yen (USD/JPY): 160.222 (+0.42%)
DAILY RECAP:
The US Dollar (USD) firmed on Wednesday as markets reacted to reports suggesting the US is preparing for a prolonged blockade involving Iran.
Rising concerns over extended disruption to Middle East energy exports unsettled investors, boosting demand for safe-haven assets such as the ‘Greenback’.
However, gains in the US Dollar were tempered by caution ahead of the Federal Reserve’s latest interest rate decision, with markets awaiting signals on the future path of monetary policy.
Meanwhile, the Pound (GBP) remained under pressure amid growing concerns over the UK’s fiscal outlook.
UK borrowing costs climbed to their highest levels since 2008, with benchmark gilt yields holding above 5%, reflecting persistent inflation worries and unease around public finances.
Investors are increasingly concerned that elevated borrowing costs could constrain fiscal flexibility, limiting the government’s ability to support households in the face of rising energy prices.
GBP/USD Forecast: Focus on BoE and US Data
Looking ahead, attention will turn to the Bank of England’s (BoE) interest rate decision.
While policymakers are expected to leave rates unchanged, forward guidance will be key, with a more cautious tone potentially weighing on Sterling.
Following the BoE announcement, the latest US GDP figures will also be in focus.
A stronger-than-expected reading could reinforce demand for the US Dollar, particularly if it supports expectations that US economic momentum remains intact despite rising energy costs.
