Risk-off sentiment boosts the US dollar (USD)
The US dollar maintained its strength on Monday morning, building on its successful week of trading. The US dollar was strong due to a news that the US economy added 517,000 new jobs in January, above the forecast of 185,000.
Due to market uncertainty, Pound Sterling (GBP) is falling behind.
On the other hand, the Pound Sterling came under pressure on Monday due to a risk-averse market environment. The Bank of England’s (BoE) decision to increase interest rates by 50 basis points last week has continued to have a detrimental effect on GBP exchange rates. The Pound did not improve despite Catherine Mann, a hardline member of the bank’s Monetary Policy Committee, calling for more rate increases.
Forecast for the GBP/USD exchange rate: US economic optimism may weaken the pound sterling
The majority of movement in the pound may be influenced by UK domestic events in the next days, such as the expanding wave of industrial action and political unrest. On the other side, the recent bumper payrolls data may help the US Dollar gain strength from projected good economic confidence on Tuesday afternoon. The GBP/USD exchange rate might be impacted by the Fed Chairman’s remarks on the employment figures and their possible influence on interest rates.