GBP/USD Decline Continues as Solid US Dollar Gains Traction Amid Election Uncertainty
The GBP/USD pair extended its decline for a second consecutive day, trading around the 1.2950 level during Thursday’s Asian session. The downside pressure on the British Pound can be attributed to a stronger US Dollar, fueled by persistent market caution amid uncertainty surrounding the upcoming US presidential election on November 5.
As the race intensifies, Former President Donald Trump has seen gains among Hispanic male voters, while candidate Harris has built support among white female voters. According to recent polling from October 16–21, Harris holds a slight lead, with 46% of the vote compared to Trump’s 43%. However, the election remains extremely close, with potential to sway markets as it draws nearer.
Upcoming US Economic Data: PCE Inflation and Nonfarm Payrolls
Forex traders are closely monitoring key economic data out of the US this week. On Thursday, the Personal Consumption Expenditures (PCE) inflation data will be released, followed by the highly anticipated Nonfarm Payrolls (NFP) report on Friday. The US Dollar faced some resistance earlier this week as Q3 Gross Domestic Product (GDP) growth came in at 2.8% (annualized), below both the previous quarter’s 3.0% and forecasts of 3.0%. Despite this, the ADP Employment Change report showed a robust increase of 233,000 jobs in October—the largest since July 2023—indicating resilience in the US labor market.
GBP Weakens Following New UK Budget
The Pound Sterling (GBP) has faced additional pressure following the UK’s newly appointed Labour government’s first budget release on Wednesday. The budget, which aims to address shortfalls in public finances and enhance funding for public services, includes £40 billion in tax hikes. One of the significant revenue-generating measures is a rise in National Insurance (NI) contributions, a tax on earnings paid by employers, which is expected to impact businesses and wage growth.
BoE’s Breeden to Address Financial Ecosystem Challenges
Investors will also focus on an upcoming keynote speech by Bank of England Deputy Governor Sarah Breeden at a joint conference hosted by the Hong Kong Monetary Authority and the Bank for International Settlements. Breeden is set to discuss the “Opportunities and Challenges of Emerging Technologies in the Financial Ecosystem,” which could provide further insight into the BoE’s policy outlook amid technological advancements in finance.
