Pound US Dollar (GBP/USD) Exchange Rate Muted Ahead of Interest Rate Decisions

Pound US Dollar (GBP/USD) Exchange Rate Holds Steady amid Cautious Trade

The Pound US Dollar (GBP/USD) exchange rate is treading water as investors abstain from hasty bet placements.

At the time of writing the GBP/USD exchange rate is trading at $1.2137, virtually unchanged from this morning’s opening rate.

US Dollar (USD) Quiet as Markets Brace for Fed Decision

The US Dollar (USD) is quiet this morning, with anxious investors hesitant ahead of the Federal Reserve’s monetary policy decision this evening.

Investors are reluctant to reposition on USD ahead of a potentially impactful meeting.

Fed policymakers are expected to enact a hawkish hold, boosting their chances of achieving a ‘soft landing’ for the US economy.

Federal official Austan Goolsbee commented:

‘Inflation still needs to come down. But we also can’t lose sight of the fact that the Fed has the chance to achieve something quite rare in the history of central banks — to defeat inflation without tanking the economy’.

Pound (GBP) Choppy Ahead of BoE Interest Rate Decision

The Pound (GBP) is moving without a clear trajectory this morning as investors anticipate a dovish interest rate hold from the Bank of England (BoE).

Investors are refraining from placing any aggressive bets on Sterling as increasingly sombre data and economic pessimism continue to cast aspersions over the health of the UK economy.

While the UK skirts with a potential recession, both investors and analysts remain expectant of a continued BoE rate hold, despite ongoing inflationary pressures.

However, markets will be keen to learn whether the bank believes it is done raising rates or if policymakers are open to another hike. This could have a notable impact on the Pound, and investors are holding back ahead of the decision.

Pound US Dollar Forecast: Fed to Enact Hawkish Hold?

This evening, the Federal Reserve’s interest rate decision is likely to be the main catalyst of movement for the ‘Greenback’. A widely anticipated rate hold could hinder USD gains. However, should the Fed adopt a hawkish tone when discussing the potential for future policy action, blows to the US Dollar could be softened.

The JOLTs job openings data for September is also due out in the US today. A forecast decline in vacancies could dent USD confidence, pointing to a slowing US labour market.

Also due out in the US is the ISM manufacturing PMI for October. If the data shows a contraction as forecast, USD could drift lower amid weakening factory activity. However, the ‘Greenback’ will most likely remain subdued as investors await Fed commentary tonight.

Looking to the UK, the Bank of England’s interest rate decision is due on Thursday. The Pound could reman choppy in the meantime as investors brace for market volatility. A continued rate hold is widely anticipated from the BoE. Potentially dovish movements could see GBP facing headwinds tomorrow.

Yasmine Arasteh

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