Pound-to-Dollar Forecast: Firm US Data Keeps GBP/USD Under Pressure

– Written by


Frank Davies

STORY LINK Pound-to-Dollar Forecast: Firm US Data Keeps GBP/USD Under Pressure

The Pound to Dollar exchange rate (GBP/USD) remained under pressure as the US Dollar continued to draw support from resilient economic data and growing speculation that the Federal Reserve could maintain a restrictive policy stance for longer. Sterling drifted back towards the 1.3430 area as investors weighed diverging signals from the Bank of England against increasingly firm US labour-market indicators.

GBP/USD Forecasts: Drifting Lower

The Pound to Dollar (GBP/USd) exchange rate has failed to make headway on Wednesday and retreated to test 1.3430 after the US open as the dollar maintained a firm overall tone.

On a very short-term view, UoB commented; “A break below 1.3430 is not ruled out, but the next support at 1.3405 is likely out of reach.”

Scotiabank considered the medium-term outlook; “We await a break of the local range roughly bound between 1.3300 and 1.3500.”

MUFG expects a near-term GBP/USD retreat to near 1.32 before a rebound to above 1.35 at year-end as initial dollar strength subsides.

Markets continued to debate the outlook for Federal Reserve and Bank of England interest rates.

According to Scotiabank; “Recent BoE communication has been mixed, with hawkish leaning comments from MPC member Greene and dovish labor-related concerns expressed by Gov. Bailey.”

It added; “BoE rate expectations recovered over the past few sessions, and yield spreads are showing signs of stabilization. Markets are pricing little risk of tightening at the June 18 meeting but anticipate nearly two full 25bpt hikes by December.”

As far as US data is concerned, ADP reported a 122,000 increase in private payrolls for May, in line with consensus forecasts while the April increase was revised slightly lower to 105,000.

ADP chief economist Dr. Nela Richardson commented; “Hiring was more broad-based in May than we’ve seen in the last few years. The labor market continues to show sustained momentum going into the summer hiring season.”

ING sees scope for additional US support; “in the G10 space, we can see the dollar winning a few friends on the view that the Fed may have to tighten after all. It also looks like there could be further unwinding of last year’s popular dollar de-basement trade idea, where expectations of a compromised Fed had led to demand for gold, bitcoin and the Swiss franc.”

Commonwealth Bank of Australia strategist Kristina Clifton added; “The U.S. labour market is improving after weakness in 2025. Combined with high inflation, we expect the Federal Reserve to begin an interest rate tightening cycle in December 2026.”

Scotiabank is less convinced on the dollar; “While geo-political uncertainty is extending the USD support now, we still rather expect some softness to emerge once a formal peace is agreed to as interest rate differentials shift amid a hawkish tilt in the monetary policy outlook outside of the US.”

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TAGS: Pound Dollar Forecasts