Pound to Dollar Price News, Forecast: GBP Below Short-Term Support
The Pound (GBP) came under pressure on Tuesday after the Office for Budget Responsibility (OBR) warned that the UK faces a £20bn fiscal gap due to weak productivity growth.
The assessment fuelled speculation that Chancellor Rachel Reeves may be forced to announce tax hikes in next month’s Autumn Budget to stabilise public finances.
Meanwhile, the US Dollar (USD) traded mixed as investors positioned cautiously ahead of Wednesday’s Federal Reserve interest rate decision.
The prospect of tighter fiscal policy dampened market confidence, keeping Sterling subdued throughout Tuesday’s European session.
- The US Dollar firmed modestly against risk-sensitive rivals amid a mildly risk-off backdrop.
- Gains were capped as traders awaited confirmation of the Fed’s expected 25bp rate cut.
Author's summary: Pound under pressure due to fiscal gap concerns.
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