Fed Hike Looms Large Over GBP/USD Exchange Rate This Week

The Pound-Dollar exchange rate is poised for significant movement this week as investors await key decisions from both the Federal Reserve and the Bank of England.

Last week, the GBP/USD exchange rate was volatile, with the US Dollar initially opening on the defensive before staging a recovery as global risk appetite deteriorated and oil prices surged.

The Pound's performance against its other peers was more muted, with Sterling initially flat after Chancellor John Healey's optimistic speech but then faltering against a stronger US Dollar in the latter half of the week.

This week, the focus will be on the Federal Reserve's rate decision, which is expected to be hawkish and could lead to a strengthening of the US Dollar, particularly if policymakers hint at further tightening in the coming months.