Pound-Dollar could stay supported if market sentiment remains stable, although renewed geopolitical tensions may revive safe-haven Dollar demand.
The Pound US Dollar (GBP/USD) exchange rate ticked higher on Monday as markets digested UK Chancellor John Healey’s speech on the economy.
At the time of writing, GBP/USD was trading at $1.3536, up around 0.15% on the day.
DAILY RECAP:
The Pound (GBP) made modest gains on Monday as markets responded to comments from UK Chancellor John Healey.
Healey reaffirmed his focus on maintaining fiscal discipline, seeking to ease concerns that had emerged around recent bond market turbulence. Much of his speech centred on boosting UK economic growth, with government investment, innovation, devolution and cutting red tape highlighted as ways to stimulate activity.
The Chancellor’s remarks appeared to receive a mildly positive response, although the reaction was relatively restrained. Sterling moved higher against a number of its peers, but the gains remained limited.
Meanwhile, the US Dollar (USD) was subdued on Monday as American markets were closed for the Labor Day federal holiday. This seemed to limit the currency’s appeal.
In addition, a mixed market mood stifled movement in the safe-haven ‘Greenback’. Asian markets were upbeat on Monday following reports that Beijing will inject $54bn into state-owned banks and insurers.
Risk sentiment moderated during the European session, but the uncertain tone kept USD muted.
Near-Term GBP/USD Forecast: Risk-Off Mood to Lift the Dollar?
Looking forward, market-moving economic data is thin on the ground for both GBP and USD on Tuesday, potentially leaving the Pound to US Dollar exchange rate to be driven by wider market trends.
Risk appetite could be the defining factor for the pairing. Escalating tensions in the Middle East could dampen the market mood and thereby support the safe-haven ‘Greenback’.
Likewise, geopolitical concerns in Europe and a deepening US-Canada trade war could also contribute to risk aversion, which in turn may boost the US Dollar’s appeal.
Our currency coverage draws on live market data, official economic releases and published bank research.
