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GBP/USD Forecast: Pound to US Dollar Exchange Rate Edges Higher on back of Bank of England Decision

August 5, 2021 - Written by John Cameron

The Pound to US Dollar (GBP/USD) exchange has strengthened this morning as markets await the latest interest rate decision from the Bank of England (BoE) later on today.

At the time of writing the GBP/USD pairing are trading at around $1.3911 level as a sour market mood limits any major losses from the US Dollar today.

Pound Sterling (GBP) Exchange Rate Awaits BoE Interest Rate Decision

The Pound has been pushing higher against the US Dollar this morning as investors brace for the latest interest rate decision from the BoE this afternoon.

The bank is not expected to make any policy changes in today’s decision, however all eyes will remain on the tone the bank chooses to take.

As the UK begins to recover from the coronavirus pandemic the bank could take a more hawkish tone moving forward.

BNP Paribas chief European economist Paul Hollingsworth commented on what we could expect from the bank, saying:

‘With insufficient evidence to conclude that the pick-up in inflation will be persistent, and rising Covid-19 cases likely to instil some caution, we think only one MPC member will vote for tighter policy now – via scaled-back QE purchase.’

‘Two consecutive months of significantly higher-than-expected inflation, coupled with a spate of recent speeches by the MPC members with a more hawkish tilt has thrown into question whether the process of policy tightening might begin earlier than expected.’

US Dollar (USD) Exchange Rate Supported by Sour Market Mood

The US Dollar has weakened against the Pound this morning as a lack of economic data from the US was unable to lift the ‘Greenback’.

However, limiting any major losses for the US Dollar today has been a broad weakness in the Euro alongside a souring market mood.

Yesterday’s ISM non-manufacturing PMI from the US had bolstered the appeal of the US Dollar but was unable to hold the ‘Greenback’s’ higher today.

This afternoon, the latest initial US jobless claims could provide the US Dollar with much needed support this afternoon is claims continue to fall.

GBP/USD Exchange Rate Forecast: US Non-Farm Payrolls in Focus

Tomorrow, the latest non-farm payrolls from the US could bolster the appeal of the US Dollar heading into the weekend.

A lack of economic data from the UK will see investors keeping an eye on any further domestic coronavirus developments during tomorrow’s session.

The GBP/USD pairing will continue to be driven by the global market mood for much of tomorrow’s session.

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