GBP/USD Forecast: Pound Sterling Slides vs Dollar Amid UK Budget Concerns

Modified: Thursday, 9 October 2025 23:00 BST - Written by David Woodsmith

STORY LINK GBP/USD Forecast: Pound Sterling Slides vs Dollar Amid UK Budget Concerns

The Pound to US Dollar (GBP/USD) exchange rate fell to a two-week low on Thursday as renewed speculation over the UK’s upcoming autumn budget dragged on Sterling.

At the time of writing, GBP/USD was trading at around $1.3361, down around 0.3% from Thursday’s opening levels.

The Pound (GBP) came under pressure on Thursday as traders grew increasingly uneasy about what Chancellor Rachel Reeves’s autumn budget might contain.

With no major UK data releases to distract markets, investors focused on the looming fiscal statement, due at the end of November.

Much of the conversation continues to centre around how Reeves will reconcile her pro-growth pledges with the pressing need to repair public finances.

Market watchers largely agree that a combination of higher taxes and restrained public spending will be unavoidable.

Yet, the uncertainty over which sectors or households will bear the brunt of these changes has left Sterling vulnerable.

At the same time, the recent uptick in UK gilt yields is fuelling further concerns over borrowing costs, adding to the headwinds facing the Pound.

The US Dollar (USD) found modest support on Thursday following a rebound from the previous session’s Fed-driven selloff.

Minutes from the Federal Reserve’s September meeting confirmed a dovish tilt, showing broad support among policymakers for last month’s quarter-point cut and further easing through the rest of 2025.

Markets are now pricing in another 50bps of cuts by year-end, most likely via two additional 25bps reductions in October and December.

However, demand for the ‘Greenback’ ticked up again on Thursday as investors adopted a more cautious stance ahead of a speech by Fed Chair Jerome Powell, with some hoping he might strike a firmer note on inflation or the path of monetary policy.

GBP/USD Forecast: Weak US Confidence to Weigh on the Dollar?

Looking ahead, the Pound to US Dollar exchange rate could recover some ground on Friday if upcoming US consumer confidence data underwhelms.

The University of Michigan’s latest sentiment index is expected to show a further dip in optimism, with households feeling the strain from stubborn inflation, softening labour market conditions, and political uncertainty surrounding the ongoing government shutdown.

If the data disappoints, the US Dollar could come under renewed selling pressure.

Meanwhile, with no fresh UK data due before the weekend, Sterling’s direction will likely hinge on broader risk appetite and any shifts in global market sentiment.

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TAGS: Pound Dollar Forecasts