The British pound faces potential downward pressure from mounting fiscal concerns despite a relatively stable near-term outlook, according to Rabobank Senior FX Strategist Jane Foley. Speaking after the latest Federal Reserve decision and ahead of the upcoming Bank of England meeting, Foley projects GBP/USD will trade within a 1.32 to 1.33 range over the next one to three months.
The forecast comes as UK fiscal sustainability concerns emerge as a key headwind for sterling, potentially offsetting any support from Bank of England monetary policy decisions. Traders are closely watching the upcoming BoE meeting for signals on interest rate policy amid ongoing inflationary pressures and economic uncertainty. The narrow trading range projection suggests limited upside potential for the pound against the dollar in the immediate term.
FXnCO Insight
GBP/USD traders should prepare for range-bound conditions between 1.32 and 1.33, with fiscal policy developments representing the primary risk factor that could drive sterling below this projected support level.
Source: FXStreet