**Pound to US Dollar Forecast: GBP/USD Near 1.35 as ISM PMI Looms**
*Original analysis by Tim Clayton, ExchangeRates.org.uk*
**Overview**
The British Pound (GBP) has shown renewed strength against the US Dollar (USD), with the GBP/USD exchange rate pushing toward 1.35. This upward movement comes ahead of key economic announcements, particularly the imminent ISM Purchasing Managers’ Index (PMI) release from the United States, which could shape near-term currency market sentiment. Investors are closely monitoring these developments, together with broader macroeconomic trends and central bank policy indications, to gauge the trajectory for the GBP/USD pair into late 2024 and beyond.
This article reviews:
– The recent performance of GBP/USD
– Economic fundamentals and policy expectations
– The influential factors behind near-term movements
– The role of the ISM PMI
– Latest forecasts and analyst perspectives for 2024-2025
**GBP/USD Recent Performance**
The past several weeks have seen the Pound Sterling carving out a series of gains against the US Dollar. The pair’s climb towards the 1.35 handle is particularly notable, setting a multi-month high and inspiring bullish sentiment among market participants.
Key factors driving recent GBP strength relative to USD include:
– Fading expectations of aggressive rate cuts by the Bank of England (BoE)
– Signs of economic resilience in the UK
– Moderating US inflation data, which has tempered bets on further Federal Reserve tightening
– Technical market dynamics, as investors and algorithmic traders respond to key breakout levels
According to analysts, the GBP/USD’s move is bolstered both by positive sentiment towards the UK’s economic prospects and by reduced enthusiasm for the Dollar, as softer US economic data weighs on policy rate expectations.
**Economic Fundamentals Remain in Focus**
Both the British and US economies have demonstrated divergent impulses since the beginning of the year.
*UK Economic Resilience*
– Recent UK economic prints have surprised to the upside, with stronger growth in services and steady consumer spending.
– Inflation in the UK, while still above the BoE’s 2% target, is on a downward path, supporting hopes for a soft landing.
– Wage growth has moderated but remains robust enough to support consumption.
– The labor market, though showing early signs of slack, has resisted any significant deterioration, helping the BoE push back against immediate rate cuts.
*US Economic Crosscurrents*
– The US economy has outperformed peers throughout 2023 and early 2024, but recent indicators highlight a possible cooling.
– Core inflation has softened, reducing the urgency for more Federal Reserve rate hikes.
– Labor market data remains healthy but shows nascent signs of weakening, with job openings coming off historic highs and monthly payroll gains moderating.
– The significant focus now is on whether the US economy will experience a soft landing or whether slower momentum could prompt the Fed to trim rates sooner than previously expected.
**Central Bank Policy Expectations**
Monetary policy remains the single most important driver for GBP/USD, with traders revising bets as economic data unfolds.
*Bank of England*
– The BoE has maintained its cautious approach, signaling that it is not ready to pivot toward cutting rates.
– Policymakers continue to emphasize their commitment to bringing inflation sustainably back to target.
– Market-based rate expectations now point towards the first cut arriving no earlier than Q4 2024, supporting Sterling.
*Federal Reserve*
– The Federal Reserve has shifted its stance away from further tightening, but officials remain reluctant to promise swift rate cuts.
– The Fed’s June meeting saw policymakers signal only modest rate reductions in 2024, as inflation remains above target.
– The market’s attention is now firmly on incoming US data to clarify the timing and pace of potential rate moves.
**Key Data Releases: ISM PMI in the Spotlight**
A major focus for GBP/USD traders in the coming sessions will be the ISM Manufacturing and Services PMI data out of the United
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