Pound Sterling to Dollar Forecast, Can GBP Finally Break Resistance?

Modified: Tuesday, 16 September 2025 08:46 BST - Written by Tim Boyer

STORY LINK Pound Sterling to Dollar Forecast, Can GBP Finally Break Resistance?

The Pound to Dollar exchange rate (GBP/USD) strengthened to a 2-month high just below 1.3600 on Monday and again testing key resistance.

GBP/USD failed to break above this area in both July and August and the outcome this time around could be pivotal for the medium term.

There are major fundamental events this week, including the Federal Reserve and Bank of England policy decisions, with the impact on expectations crucial for currency markets.

Key elements will be expectations surrounding the November Bank of England policy decision and the number of Fed rate cuts this year.

MUFG asks; “Will G10 Central Bank updates bring an end to recent FX range trading?”

UoB noted; “GBP must break and hold above 1.3595 before a move toward 1.3635 can be expected.”

According to ING; “GBP/USD could break above resistance at 1.3590/3600 this week if the Fed is sufficiently dovish.”

Scotiabank sees scope for GBP/USD gains towards 1.38 if there is a break above 1.36.

From a longer-term perspective the bank expects gains to 1.40 by the end of 2025.

The Federal Reserve will announce its latest interest rate decision on Wednesday.

There are very strong expectations that the Fed will sanction a rate cut with markets pricing in just below a 95% chance of a 25 basis-point cut with a small chance of a larger 50 basis-point cut.

There is an important element of uncertainty surrounding voters at this meeting.

The Administration is aiming for a Senate vote on Monday to confirm Miran’s appointment as a Governor which would allow him to participate in this week’s meeting.

President Trump is also still trying to overturn a court decision and have Governor Cook fired from the central bank.

Markets will also be looking at the latest economic forecasts, including the new set of interest rate projections.

Guidance from Powell will also inevitably be a key element.

MUFG commented; “For short-term US yields to continue adjusting lower to provide a fresh trigger for another leg lower for the US dollar, the Fed would either have to deliver a larger rate cut this week and/or signal that larger rate cuts are on the table if the US labour market continues to weaken.”

There are strong market expectations that the Bank of England will hold interest rates at 4.00% this week.

The labour-market and inflation data, however, could have some impact on the bank’s rhetoric as well as market expectations surrounding the November meeting.

MUFG commented; “With so little priced for another BoE cut this year, UK rates and GBP should be more sensitive to softer data.”

According to ING; “Unless we see some surprise drop in employment and/or wages/services inflation, it looks like the Bank of England will continue the hawkish narrative it introduced at the August MPC meeting.”

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TAGS: Pound Dollar Forecasts