Pound to Dollar Forecast for the Week Ahead: Will GBP/USD Slump on Downbeat UK Data?
The pound to dollar forecast suggests potential downside for the GBP/USD pair in the coming week, driven by key economic data from both the UK and US. As of now, the GBP/USD pair has traded around $1.3074, marking a 0.4% decline last week. Shifting interest rate expectations and uncertainty surrounding the UK budget contributed to the currency’s struggles.
UK Budget Uncertainty Weighs on GBP/USD
The pound’s performance took a hit early last week, influenced by concerns over possible Bank of England (BoE) interest rate cuts. This came after dovish comments from BoE Governor Andrew Bailey, which weakened GBP’s appeal. Later in the week, reports suggesting that UK Chancellor Rachel Reeves could adjust the government’s fiscal rules to create more headroom for investment cheered the market briefly. However, optimism quickly faded amid claims that the Treasury’s revenue-raising plans were in disarray, pulling the pound lower.
GDP Growth Helps Pound Recover Slightly
Towards the end of the week, the pound to dollar forecast showed a slight recovery for GBP as new UK GDP data revealed that the British economy returned to growth in August. This helped lift the pound, although the gains weren’t enough to offset the weekly decline. The currency remained pressured by broader concerns in the market.
USD Strength Supported by Strong Payrolls Data
On the other side, the US dollar continued to enjoy momentum from stronger-than-expected payroll figures from the prior week. This data tempered expectations for further aggressive rate cuts from the Federal Reserve. Minutes from the Fed’s September meeting showed that policymakers are leaning toward more gradual interest rate cuts going forward.
Key Data to Watch in the Pound to Dollar Forecast
Looking ahead, the pound to dollar forecast will hinge on several high-impact data releases. First, the UK’s August labor market report, due on Tuesday, could trigger volatility if the unemployment rate rises as forecasted from 4.1% to 4.6%. This increase would mark the highest unemployment level in three years.
On Wednesday, UK inflation data is expected to show a decline in core inflation, which could further pressure the pound. Friday’s retail sales data might add to this weakness, particularly if sales decline as expected. Meanwhile, in the US, retail sales data could offer support for the dollar, although rising jobless claims could limit any upside for USD.
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