GBP/USD Forecast: Pound Sterling Rises as Dovish Fed Speech Weighs on Dollar

Modified: Wednesday, 15 October 2025 22:30 BST - Written by David Woodsmith

STORY LINK GBP/USD Forecast: Pound Sterling Rises as Dovish Fed Speech Weighs on Dollar

The Pound US Dollar exchange rate (GBP/USD) managed to edge higher on Wednesday, as the currency pair was bolstered by the day’s risk-on flows.

At the time of writing, GBP/USD was trading at approximately $1.3357, up roughly 0.3% from the start of Wednesday’s session.

The US Dollar (USD) struggled to attract support on Wednesday, weakening against the majority of its major peers as an upbeat market mood sapped demand for the safe-haven currency.

With investors showing greater appetite for risk-sensitive assets, the ‘Greenback’ lost ground during mid-week trade, as optimism in global markets diverted flows away from the traditionally safe USD.

Adding to the pressure, lingering reactions to Federal Reserve Chair Jerome Powell’s speech on Tuesday continued to weigh on sentiment.

Powell struck a notably dovish tone, prompting traders to scale back bets on the Dollar, and left USD exchange rates struggling to regain momentum throughout Wednesday’s European session.

The Pound (GBP), by contrast, held firm against most of its major counterparts on Wednesday and even managed to edge higher against several rivals, despite a quiet day on the UK data front.

With no domestic releases to drive direction, Sterling took its cues from broader market sentiment, finding support amid the day’s upbeat trading tone.

As a currency that increasingly benefits from risk-on trading conditions, the Pound strengthened against traditional safe-haven currencies, buoyed by improved investor confidence.

However, this same dynamic saw GBP struggle to keep pace with its more risk-sensitive peers, resulting in a mixed performance overall during Wednesday’s European session.

Looking ahead to Thursday’s European session, movement in the GBP/USD exchange rate is likely to hinge on the release of the UK’s latest GDP report.

The figures for August are expected to show a modest 0.1% expansion, which, while not particularly strong, could still lend the Pound some limited support if the data meets or exceeds forecasts.

Across the Atlantic, the ongoing US government shutdown means key data releases will once again be delayed, leaving the US Dollar vulnerable to broader market sentiment and commentary from Federal Reserve officials.

If upcoming Fed speeches lean dovish, reinforcing expectations of potential interest rate cuts later this year, the ‘Greenback’ could face additional selling pressure, paving the way for further USD losses through Thursday’s European trade.

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TAGS: Pound Dollar Forecasts