Pound Sterling Price News and Forecast: GBP/USD strengthened as the USD struggled following Moody's downgrade

FXStreet Team FXStreet

GBP/USD maintains position above 1.3350 as US Dollar weakens on economic concerns

GBP/USD continues its upward momentum for the second consecutive session, hovering near 1.3360 during Asian trading hours on Tuesday. The Pound Sterling (GBP) is strengthening as the US Dollar (USD) softens in response to Moody’s Ratings downgrading the US credit rating from Aaa to Aa1.

This downgrade echoes similar actions by Fitch Ratings in 2023 and Standard & Poor’s in 2011. Moody’s now anticipates that US federal debt will rise to approximately 134% of GDP by 2035, up from 98% in 2023, while projecting the federal budget deficit to widen to nearly 9% of GDP. The downgrade reflects concerns over surging debt-servicing costs, growing entitlement spending, and declining tax revenues. Read more...

GBP/USD breaks above recent consolidation on fresh Greenback weakness

GBP/USD rose at the outset of the new trading week, briefly testing the 1.3400 handle for the second time in two weeks. Despite an early bullish push in cable bids, buyers couldn’t lock in a fresh high, and price action trimmed back to a more sedate 1.3350.

Moody’s ratings agency stripped the United States (US) of its last remaining AAA rating on its Treasuries last Friday, citing burgeoning US debt and government deficits that successive presidential administrations either refuse to, or are incapable of, bringing under control. Investor sentiment wobbled at the headlines, but quickly recovered and shrugged off the hit to US creditworthiness. Still, not all is perfectly rosy in the Treasury markets: 30-year yields broke above 5% on Monday, and 10-year yields traded north of 4.5%. Read more...

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