GBP/USD Outlook:
Slightly positive, but likely to move sideways as the rate is above its recent average but lacks a clear driver.
Key drivers:
• Rate gap: The Bank of England has adopted a more dovish stance, keeping interest rates steady, while the Federal Reserve has paused its rate cuts, limiting USD strength.
• Risk/commodities: Oil prices have remained volatile, impacting UK inflation and the GBP, as rising costs could affect consumer spending.
• One macro factor: UK retail sales showed stronger growth, but the mixed economic indicators create uncertainty for GBP strength.
Range:
GBP/USD is likely to drift within its current levels, testing both support and resistance without significant directional changes.
What could change it:
• Upside risk: A stronger-than-expected GDP figure could boost GBP confidence.
• Downside risk: Weak US non-farm payroll data may amplify pressures on the dollar, influencing the GBP/USD.
