Pound-Dollar Exchange Rate Fluctuates Amid Fed Rate Hike Uncertainty

The Pound-Dollar (GBP/USD) exchange rate saw fluctuations on Monday, influenced by shifting market sentiment and key economic data. The pair initially dipped to $1.3192 but later recovered to $1.3226, still down marginally from the previous close. The US Dollar (USD) gained early support from a risk-off mood driven by tensions in the Middle East, particularly after attacks near the Strait of Hormuz. However, the Dollar's strength waned as markets reassessed Federal Reserve interest rate expectations following weak US payrolls data.

The Pound (GBP) also faced early pressure due to the risk-off sentiment but rebounded later in the day. A slight upward revision in the UK's final services PMI for September, from 51.7 to 52.1, provided some support for Sterling. This revision, though still showing a slowdown from August's 52.5, helped stabilize the Pound's position.

Looking ahead, two dovish Federal Reserve officials, Michelle Bowman and John Williams, are set to speak on Tuesday. Their remarks could further reduce expectations of a Fed rate hike, potentially weakening the Dollar. Meanwhile, the Pound's movement may be limited due to a quiet data calendar, leaving it more exposed to shifts in market risk appetite. A risk-on mood could bolster the Pound, while a risk-off environment might favor the Dollar.