\n Frank Davies
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STORY LINK Pound Sterling to Dollar Forecast: GBP Rebound Amid US Growth Fears<\/a><\/p>\n <\/p>\n The Pound to Dollar exchange rate (GBP\/USD) rebounded slightly above 1.3200 after sliding to four-month lows near 1.3160, as markets weighed growing concerns over the US economic outlook.
<\/p>\n While a recovery in risk appetite has provided some support to Sterling, ongoing energy market volatility and uncertainty over Federal Reserve policy continue to limit the scope for sustained gains.
<\/p>\n GBP\/USD Forecasts: Attempts to Rally from 4-Month Lows<\/p>\n According to UoB; \u201cFrom here, there is a chance for GBP to drop to 1.3100. We will maintain the same view as long as 1.3285 remains intact.
<\/p>\n Goldman Sachs has a 12-month GBP\/USD forecast of 1.33.
<\/p>\n Risk appetite came under pressure on Monday, but there was a rebound in equities on Tuesday which limited the scope for further dollar buying and also offered some protection for the Pound.
<\/p>\n The Middle East situation remains a crucial element with some hopes that the US will look for a way to de-escalate the situation.
<\/p>\n Save on Your GBP\/USD Transfer<\/p>\n \n Get better rates and lower fees on your next international money transfer. ING commented; \u201cTrying to second-guess White House policy remains a hazardous occupation, but this Tuesday morning it seems investors are minded to look out for any signs of de-escalation. <\/p>\n It added; \u201cWith US light crude now trading above $100\/bl \u2013 a sensitive level for the White House, apparently \u2013 the market will be on the lookout for any softer US rhetoric today.\u201d
<\/p>\n The economic impact of higher energy prices will also be a growing focus.
<\/p>\n According to Rabobank; \u201cthe market is grappling with two major unknowns that feed directly into each other: when oil flows through the Strait will resume in meaningful volumes, and at what price level oil switches from an inflation story to a recession story.\u201d
<\/p>\n The UK 10-year gilt yield traded marginally lower at 4.85%, but upward pressure on mortgage rates will continue. The Federal Reserve and Bank of England responses will also be monitored very closely.
<\/p>\n ING commented; \u201cFed Chair Jerome Powell yesterday sounded quite relaxed. Clearly, there was no fuel to the view of early Fed hikes here, and money markets switched back towards pricing a Fed cut by the end of the year.\u201d
<\/p>\n MUFG added; \u201cMarket participants have moved to price back in a higher likelihood of the Fed\u2019s next policy move being a rate cut rather than a hike.\u201d
<\/p>\n US economic data will start to have a greater impact with a series of labour-market reports this week.<\/p>\n Danske Bank commented; \u201cThe sharp decline in labour supply growth leaves the US economy more vulnerable to downturns than in the past, and high-frequency data could be flagging warning signs of early negative sentiment effects.\u201d
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