Pound Sterling to Dollar Forecast: GBP Range-Bound as USD Resists Selling

Modified: Friday, 5 September 2025 08:33 BST - Written by Tim Boyer

STORY LINK Pound Sterling to Dollar Forecast: GBP Range-Bound as USD Resists Selling

The Pound to Dollar (GBP/USD) exchange rate outlook remains capped below 1.3500, with Sterling consolidating around 1.3430 as softer US jobs data fails to dent Dollar strength.

The US Dollar has resisted selling pressure even after a slowdown in hiring, with markets focused on the September Fed meeting and the looming UK budget.

Analysts expect the GBP/USD to consolidate in a tight range, with resistance near 1.35–1.36, as fiscal uncertainty weighs on the longer-term Pound Sterling forecast.

GBP/USD Forecasts: Held Below 1.3500

The Pound to Dollar (GBP/USD) exchange rate was unable to hold above 1.3450 on Thursday and settled around 1.3430 as the dollar avoided further pressure despite weaker-than-expected US jobs data. Sterling secured tentative net support from a retreat in UK bond yields.

XTB research director Kathleen Brooks commented; "With uncertainty likely as we lead up to the budget in November, we believe that sterling peaked in July at $1.38, and may trade sideways below $1.35 in the short term.

According to Scotiabank the pair can edge higher; “the 50 day MA (1.3483) remains a powerful level attracting near-term congestion. This week’s extended candle shadows have highlighted the importance of support below 1.3400, and resistance appears limited ahead of 1.3600.”

US labour-market data remains a key focus for markets.

ADP data recorded an increase in private payrolls of 54,000 for August compared with consensus forecasts of around 75,000 and following a 106,000 gain for July.

Challenger reported another increase in layoffs for August. For the first eight months of 2025, layoffs increase to 892,000 from 536,000 the previous year and the highest total since 2020.

Scotiabank commented; “Although the ADP data does not track the NFP report that closely on a month-by-month basis, the broader trend in in the two reports shows a closer alignment, especially over the past year. Both series clearly reflect a clear slowing in the US labour market.”

It added; “Just how weak the jobs picture looks in August will shape expectations for Fed policy changes at the September 17th FOMC and perhaps beyond.”

The UK construction PMI index improved slightly to 45.5 for August from 44.3 previously and close to market expectations.

Tim Moore, Economics Director at S&P Global Market Intelligence, commented; "Construction activity has decreased throughout the year-to-date, which is the longest continuous downturn since early-2020.”

The latest Bank of England Decision Makers Panel (DMP) recorded a small increase in 1-year inflation expectations to 3.3% from 3.2% previously.

Employers also reported a 0.5% annual decline in employment, the sharpest decline since August 2021.

Rob Wood, chief UK economist at Pantheon Macroeconomics commented; "The DMP survey shows stubborn wage and price pressures despite falling employment, continuing to suggest that structural economic changes and supply weakness are keeping inflation high.”

Pantheon does not expect further BoE rate cuts this year amid persistent inflation pressures.

There are still notable concerns surrounding the fiscal outlook, although 30-year gilt yields have retreated further from 27-year highs.

According to Scotiabank; “The path forward remains challenging as markets consider the looming Nov 26 budget and its implications for growth. However, the anticipated fiscal restraint remains a critical source of confidence for markets and should serve to limit the recent spiral in borrowing costs.”

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TAGS: Pound Dollar Forecasts