Pound Sterling Price News and Forecast: GBP underperforms US Dollar, Fed's policy awaited

FXStreet Team FXStreet

Pound Sterling underperforms US Dollar, Fed's policy awaited

The Pound Sterling (GBP) posts a fresh almost three-month low at around 1.3200 against the US Dollar (USD) during the European trading session on Wednesday. The GBP/USD pair slumps as the US Dollar Index (DXY) trades higher ahead of the Federal Reserve’s (Fed) monetary policy announcement at 18:00 GMT and the continued underperformance from the British currency. At the time of writing, the US Dollar Index trades 0.2% higher to near 99.00.

Investors keenly await the Fed’s policy announcement to get cues on the interest rate outlook, while remaining confident that the United States (US) central bank will reduce borrowing rates for the second time in a row. Read more...

GBP/USD Price Forecast: Plummets to three-month low amid fiscal concerns, ahead of Fed

The GBP/USD pair extends its downfall for the second consecutive day – also marking the ninth day of a negative move in the previous ten – and drops to a nearly three-month low during the first half of the European session on Wednesday. The British Pound (GBP) continues with its relative underperformance in the wake of growing concerns about the UK's fiscal situation. In fact, reports suggest that the UK Office for Budget Responsibility (OBR) is expected to lower productivity forecasts by about 0.3%, which could widen the fiscal gap by over £20 billion. This comes ahead of Finance Minister Rachel Reeves' Autumn budget on November 26 and turns out to be a key factor behind the GBP's underperformance amid rising bets for more rate cuts by the Bank of England (BoE).

Traders now see a roughly 68% chance that the UK central bank will cut interest rates by 25-basis-points (bps) in December, as softer inflation and fiscal headwinds provide a greater scope to ease policy. The expectations were reaffirmed after the British Retail Consortium (BRC) reported on Tuesday that food prices fell 0.4% month-on-month in October, marking the biggest drop since December 2020. Read more...

Author

FXStreet Team

FXStreet

EUR/USD keeps the offered stance just above 1.1700

EUR/USD is coming under heavy selling pressure in what has been a rather grim start to the new trading week, with the pair now trading close to the 1.1700 support area as the US Dollar stages a solid rebound. The prevailing flight to safety mood continues to favour the Greenback, as investors react to the escalating conflict in the Middle East and trim risk exposure across the board.

GBP/USD hits new yearly lows near 1.3300

GBP/USD adds to the recent bearish tone, approaching to the key 1.3300 support to reach fresh YTD troughs against the backdrop of the robust performance of the US Dollar. Indeed, Cable’s decline comes amid the firm demand for the safe-haven space in the wake of the US and Israel attacks to Iran.

Gold battles to retain the positive momentum

Gold now surrenders part of the earlier advance past the $5,400 mark per troy ounce at the beginning of the week. Indeed, the precious metal’s strong uptick remains fuelled by increasing geopolitical tensions in the Middle East amid the intense demand for safer assets.