– Written by
Frank Davies
STORY LINK GBP/USD Forecast: Burnham’s Fiscal Pledge, Peace Talks Lift GBP
The Pound US Dollar (GBP/USD) exchange rate advanced on Monday as easing tensions between the US and Iran lifted appetite for risk.
At the time of writing, GBP/USD was trading at around $1.3241, up roughly 0.3% on the day.
The US Dollar (USD) slipped on Monday as improving market sentiment weighed on demand for the safe-haven currency.
Risk appetite strengthened after tensions in the Middle East appeared to ease, with the US and Iran agreeing to pause further attacks following a weekend of retaliatory strikes.
The two countries are due to meet in Doha on Tuesday for further peace talks, helping to reassure markets that the recent escalation may not derail diplomatic efforts.
With investors adopting a more upbeat stance, demand for the safe-haven ‘Greenback’ faded, leaving USD on the back foot at the start of the week.
Meanwhile, the increasingly risk-sensitive Pound (GBP) found support from the brighter market mood, while Sterling also drew strength from a speech by Andy Burnham – who is widely expected to replace outgoing Prime Minister Keir Starmer.
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In the address, Burnham set out plans to deliver more balanced regional growth across the UK economy. Importantly for GBP investors, he also reaffirmed his commitment to fiscal discipline, while outlining aims to reindustrialise parts of the country and bring down welfare spending.
Markets welcomed Burnham’s comments, with UK gilt yields edging lower in response. However, as the speech focused more on broad ambitions than concrete policy proposals, the Pound’s upside remained somewhat limited.
Near-Term GBP/USD Forecast: Strong UK GDP to Support the Pound?
Looking ahead, the UK’s finalised first-quarter GDP figures could act as a key driver for the Pound on Tuesday.
If the data confirms that growth accelerated at the beginning of the year, Sterling may find some modest support. However, the release may not trigger much movement if it comes in line with previous estimates.
A revision could spark a sharper reaction. An upward adjustment may strengthen GBP, while a downgrade could drag on the UK currency.
For the US Dollar, Tuesday afternoon brings the latest JOLTS job openings data. Evidence of resilient hiring demand in May could help underpin USD exchange rates.
The latest US consumer confidence index may also influence the ‘Greenback’, with economists expecting household morale to have improved in June.
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TAGS: Pound Dollar Forecasts
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