Pound US dollar (GBP/USD) exchange rate wavers ahead of high-impact events
The pound US dollar (GBP/USD) exchange rate has fluctuated so far this morning amid market tremors ahead of some potentially earth-shaking events: the UK Autumn Budget and US GDP growth.
At the time of writing, GBP/USD is trading at $1.3000, having oscillated between highs of $1.3026 and lows of $1.2992.
Pound (GBP) volatile as investors await budget
The pound (GBP) is choppy this morning as GBP investors await the UK’s Autumn Budget.
Anticipation has been building for weeks, with the Labour government promising increased investment while also warning of ‘painful’ decisions on tax and spending.
Recently, a hopeful tone has helped to lift the pound. However, the mixed messaging and uncertainty around the budget are causing Sterling to waver today.
US dollar (USD) wobbles amid market jitters
The US dollar (USD) has also seen volatility this morning, amid a skittish mood in global markets.
In addition to today’s UK budget announcement, we also have the first estimates for third-quarter GDP growth in both the Eurozone and the US. These releases could be crucial in determining just how fast the Federal Reserve and European Central Bank (ECB) could cut interest rates, while also giving an important snapshot of the health of the global economy.
Furthermore, the looming US election is adding to the febrile mood. The polls show Kamala Harris and Donald Trump neck-and-neck in the race for the White House, with just six days to go before election day.
Against this backdrop of uncertainty and expected volatility, USD is wavering this morning.
GBP/USD exchange rate forecast: big swings ahead as budget looms?
Looking ahead, GBP investors are laser-focused on the Autumn Budget.
With optimism building ahead of the budget, there is a chance that the announcement could disappoint investors. Chancellor Rachel Reeves will likely try to strike a positive tone, but we could see Sterling stumble if the budget doesn’t live up to expectations.
It’s also possible that tax hikes and higher borrowing spook investors, thereby denting the pound. Or the government’s growth-boosting measures may be seen as inflationary, which could see Sterling strengthen.
Whatever the case, we could see GBP volatility as markets react to the budget.
As for the US dollar, the latest American GDP figures are the focus. If we see another 3% expansion in the US economy in the third quarter, the ‘greenback’ could rally.