Pound to Dollar Week Ahead Forecast: GBP Braced for Fed Cut

Modified: Monday, 15 September 2025 11:00 BST - Written by Tim Boyer

STORY LINK Pound to Dollar Week Ahead Forecast: GBP Braced for Fed Cut

The Pound to Dollar exchange rate (GBP/USD) held just above 1.3550 this week but failed to clear resistance at 1.3590 as traders brace for a pivotal run of central bank decisions.

The Federal Reserve is widely expected to cut rates, while the Bank of England is set to hold steady, with markets watching for vote splits and guidance.

Banks remain divided: Nomura sees GBP/USD sliding to 1.30 by October, while UBS targets a move towards 1.40 on weaker dollar yields.

GBP/USD Forecasts: Central Bank Calls Drive Sterling Outlook

Nomura forecasts that the Pound to Dollar (GBP/USD) exchange rate will weaken to 1.30 by the end of October amid renewed fundamental UK vulnerability.

UBS, however, expects positive yields will help protect the Pound with gradual gains towards 1.40 amid a weaker dollar.

GBP/USD secured a net advance to just above 1.3550 during the week as the dollar drifted lower, but failed to break above 1.3590.

Central bank policy decisions will be a key element in the week ahead even though there are strong consensus forecasts surrounding the actual decisions.

Traders are extremely confidence that the Federal Reserve will cut rates with over a 90% chance of a 25 basis-point cut.

The potential for a further Bank of England rate cut is seen at below 5%, although there is a strong possibility of another split vote.

According to ING; “Our best guess is that six officials will vote to keep rates on hold, with three voting for another 25bp cut.”

ING commented; “Few expect a rate cut this month, but the vote split and forward guidance will be closely scrutinised for any subtle endorsement (or not) of a November move. We narrowly favour one more cut later this year, though this is heavily contingent on the economic data.”

According to Nomura, there is the risk of renewed volatility in the UK bond market; “we see greater downside tail risks for GBP regarding the BoE’s quantitative tightening announcement on 18 September, the challenging UK budget coming into view on 26 November, and some room for a tactical USD bounce.”

ANZ outlined its new Federal Reserve expectations; “Owing to persistent weakness in the labour market in recent months, we are adding an additional 50bp of cuts to our fed funds easing profile.”

It expects rate cuts to at least 3.00%.

According to UBS; “Overall, we expect the Fed to shift toward a more dovish stance given the recent labor market weakness, matching market expectations for more easing and a weaker USD.”

According to HSBC, there is limited scope for Pound gains; “With the Fed widely expected to resume rate cuts, the rate differential should prove an important source of support for GBP-USD. With a BoE pause now likely and CFTC futures signalling the market holds a small net short GBP position, we think GBP-USD will move towards 1.37 by year-end.”

From a medium-term perspective, markets are fretting over potential threats to Fed independence and risks surrounding the next central bank chair.

Bank of America commented; "If we get a more dovish Fed chair, which presumably we will, we do think the Fed will cut rates at that point, in the second half of next year by an additional 75 basis points."

It added; "How willing are you to cut rates and to what level are you willing to cut rates? That's going to be a key interview question for the next Fed chair."

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TAGS: Pound Dollar Forecasts