Falling US confidence boosts GBP/USD
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Daily Currency Update
The pound continues to rise against the US dollar as declining US consumer confidence, falling at its fastest rate in three years, puts pressure on the greenback.The Bank of England’s decision to hold rates steady last week, along with its cautious stance on future rate cuts, has further fuelled sterling’s rise. Markets are pricing in just 50 basis points of cuts by December, which would bring the base rate to 4.50%.
The prospect of a slower pace of rate cuts in the UK compared to other major economies has strengthened sterling’s position in the FX market. This has made the pound the top-performing G10 currency against the dollar this year, up 5.2%, while the euro has gained only 1% against the dollar. Sterling's continued outperformance could attract more demand, further supporting its upward trajectory.
Key Movers
The US dollar closed as the weakest of the major currencies yesterday, following disappointing Consumer Confidence and Richmond Fed survey data. The Conference Board’s Consumer Confidence index fell sharply to 98.7, well below the expected 104.0, marking the largest one-month drop since August 2021.This data disappointment could have a significant impact on the FX markets. A weaker dollar may trigger a shift in investor sentiment, leading to increased demand for other major currencies. It also raises concerns about the strength of the US economy, potentially influencing the Federal Reserve's monetary policy stance and contributing to further dollar depreciation. This could lead to heightened volatility in USD currency pairs as traders reassess their positions.
Expected Ranges
- GBP/USD: 1.3375 - 1.3445 ▲
- GBP/EUR: 1.1945 - 1.2025 ▲
- GBP/AUD: 1.9425 - 1.9515 ▼
- EUR/USD: 1.1165 - 1.1235 ▲