Pound to Dollar Week Ahead Forecast: Analysts Split on GBP Outlook

Modified: Monday, 29 September 2025 10:00 BST - Written by Frank Davies

STORY LINK Pound to Dollar Week Ahead Forecast: Analysts Split on GBP Outlook

The Pound to Dollar (GBP/USD) exchange rate is trapped near 1.3400 with UK fiscal fears still a major headwind. Analysts are divided on the outlook: Scotiabank projects gains to 1.40 by end-2025 and 1.48 into 2026, while Wells Fargo argues Sterling will be capped at 1.35 through 2026.

Standard Chartered warns that reliance on tax hikes risks weighing on growth, even as rate differentials provide GBP some fundamental support.

GBP/USD Forecasts: Fiscal fears in focus

Scotiabank forecasts that the Pound to Dollar (GBP/USD) exchange rate will strengthen to 1.40 at the end of 2025 with further gains to 1.48 by the fourth quarter of 2026.

Wells Fargo expects that GBP/USD will not break above the 1.40 level and will be held to 1.35 at the end of 2026.

GBP/USD dipped to 7-week lows at 1.3330 during the week on a dollar comeback and UK bond-market concerns before recovering to around 1.3400.

UK fiscal concerns will remain an important underlying element for the Pound.

Standard Chartered commented; “The UK’s deficit remains sizable but is likely to improve, easing fears of a fiscal crisis. However, a reliance on tax hikes could weigh on growth and cap GBP gains. Fiscal stress is a risk.”

Scotiabank is more confident over Pound fundamentals; “Interest rate differentials have pushed to fresh highs, reaching levels seen in mid-2023, offering the GBP a critical source of fundamental support. Political uncertainty relating to the UK’s fiscal outlook has moderated considerably, shifting sentiment in a constructive manner.”

Markets are wary over a potential US government shutdown which could happen during the week ahead with underlying debt concerns also important.

Scotiabank; “A weak phase in the USD, driven at least in part by weak fiscal policy would be very much in keeping with the broad, historic evolution in the US exchange rate since the 1970s. Bouts of USD strength are typically driven by superior fundamentals and yields on US assets while bearish USD phases have typically reflected rising investor concerns about structural negatives that have developed in the US economy, reflected by large and persistent trade and fiscal shortfalls.

The bank added; “A final point to consider in the broad outlook for the USD is the abiding impression that a weaker exchange rate may be part of the aggressively mercantilist policy the US administration is pursuing.”

MUFG still expects a near-term focus on the labour market; “If the labour market data was to prove better than expected next week, it would certainly undermine the primary argument put forward by Fed Chair Powell to cut rates further and force the Fed to give more weight to the upside inflation risks.”

Wells Fargo expects dollar gains later in 2026; “Our base case is that any U.S. dollar weakness stemming from uncertainty around U.S. economic policy will dissipate over time. In that sense, our view remains that the U.S. dollar will not lose its status as the world's pre-eminent reserve currency.”

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TAGS: Pound Dollar Forecasts