GBP/USD Falls on Fed Rate Hike, Recovery Possible with Strong UK Data

The Pound to US Dollar exchange rate fell by 1.1% last week after the Federal Reserve raised interest rates for the first time in three years.

GBP/USD was trading at around $1.3365, down from its opening value for the week.

The Fed's decision was seen as a hawkish signal, with Fed Chair Kevin Warsh stressing the need to control inflation and indicating another rate hike before year-end.

The Pound had been under pressure earlier in the week due to poor UK macroeconomic data, including a jobs report that showed underlying weakness in the labour market.

However, Sterling managed to recover slightly on Friday after an unexpected rebound in UK retail sales.

This week may see some respite for the Pound if UK PMIs improve, but US durable goods orders are expected to contract, potentially supporting the Dollar.