Scotiabank Pound-Dollar Forecast: GBP To Rise Towards 1.38 As BoE Supports Sterling

The Pound to Dollar (GBP/USD) exchange rate eased to 1.3576, with the pair consolidating after a recent rally as quieter holiday trading conditions limited volatility.

Scotiabank notes that the British Pound Sterling remains supported by a relatively hawkish Bank of England stance, with Governor Bailey signalling an “active hold” on policy.

“Yield spreads (UK-US) are supportive… offering fundamental upside for the GBP.”

The bank highlights that UK-US yield differentials remain near multi-year highs, underpinning the pound and suggesting scope for further gains, particularly as markets are only lightly pricing tightening at the June BoE meeting.

Scotiabank adds that improving sentiment and fading geopolitical concerns could allow sterling to extend its recovery, although UK political uncertainty remains a lingering risk ahead of upcoming local elections.

Scotiabank expects the Pound to Dollar exchange rate (GBP/USD) to trend higher towards the 1.38 area in the near-term, supported by favourable yield spreads and a constructive policy backdrop.

Technical signals are also supportive, with momentum indicators strengthening and the pair clearing key retracement levels.

“Bullish… we note the absence of any material resistance ahead of the January high in the mid/upper-1.38s.”

In the near term, Scotiabank sees the Pound top US Dollar exchange rate (GBP/USD) trading within a 1.3550 to 1.3650 range before attempting further upside.

Disclaimer: For information only, not investment advice. This GBP to USD forecast summarises and interprets third-party research; views expressed are those of the original source and may not fully reflect the source’s complete analysis. Neither the source nor we accept liability for reliance on this interpretation.