**Pound to Dollar Forecast: Eyes on 1.3465 as Market Focus Shifts – Analysis by Currency News**
*Original author: Currency News UK Market Analysts (currencynews.co.uk)*
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## Introduction
The exchange rate between the British Pound (GBP) and the US Dollar (USD), commonly known as GBP/USD or “cable,” remains a closely watched currency pair on global markets. Over the past days and weeks, speculative moves, macroeconomic releases, and central bank commentary have driven the direction of sterling against the greenback. However, as highlighted in recent analysis from Currency News UK, investor sentiment and forecasts are now focusing towards a new technical target: 1.3465.
With the landscape evolving amidst shifting monetary policies and variable economic data, this comprehensive article delves into the primary market drivers shaping GBP/USD, outlines expectations for the near to medium term, and presents an in-depth technical view following the insights provided by Currency News UK market analysts.
## Recent GBP/USD Performance and Sentiment Shift
The British Pound has experienced periods of both resilience and volatility against the US Dollar in mid-2024. After recovering from lows near 1.25 earlier this year, sterling’s momentum has often been dictated by:
– Divergences in central bank policy between the Bank of England (BoE) and Federal Reserve (Fed).
– Market responses to inflation and employment data from both the UK and US.
– Broader risk appetite trends, intertwined with geopolitical events and global economic updates.
### Key Performance Highlights
– **Spring Rally:** GBP/USD rose steadily in spring, breaking the 1.30 psychological barrier.
– **Data Sensitivity:** Mixed UK GDP and inflation prints injected uncertainty, while surprise hawkishness from the Fed offered periodic USD support.
– **Interim Consolidation:** Traders have observed periods of range-bound action, indicative of indecision amid macroeconomic cross-currents.
## BoE and Fed Policy: Policy Divergence Takes Center Stage
Central bank interest rates and market expectations about future moves remain pivotal in determining currency valuations.
### Bank of England
For much of 2024, the BoE has operated in a zone of caution, attempting to keep inflation on a steady downward path while being mindful of soft patches in British economic growth. The Monetary Policy Committee (MPC) faces the delicate task of:
– Not cutting rates too quickly and risking a resurgence in inflation.
– Not staying restrictive for too long and impeding growth, especially with consumer confidence and business investment trending lower.
**Market View:**
– Investors see the BoE as being on the cusp of the first rate cut, but rate futures suggest this easing won’t be aggressive or rapid.
– Lingering core inflation above 2% keeps the BoE wary of dovish stances, which lends some underlying support to GBP.
### US Federal Reserve
The Fed, by contrast, surprised markets in June by delaying anticipated rate cuts. FOMC statements have reaffirmed a data-dependent approach, weighing persistent inflation (especially in services) against pockets of labour market cooling.
**Market View:**
– A single rate cut is now expected in the second half of 2024, with projections focusing on December rather than September moves.
– The Fed’s patience has given the dollar periodic lifts but failed to engineer a sustained rally due to global risk-on mood and large current account deficits.
## UK Macroeconomic Data: Recovery with Caveats
The evolution of GBP/USD often hinges on the comparative pace of UK and US economic recoveries.
### GDP and Growth
– Recent UK GDP numbers have pointed to a tentative recovery after contractions in previous quarters. Services sector strength offsets manufacturing and construction lag.
– The OBR and independent think tanks forecast annual growth of 0.7% to 1.0% – modest, but an improvement from previous stagnation.
### Inflation
– UK CPI inflation has fallen from 10%+ highs back towards the 2% BoE
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