Pound Sterling to Dollar Forecast: CIBC Sees 1.37 Year-End Despite Risk-Off Slide

Modified: Sunday, 19 October 2025 23:15 BST - Written by Ben Hughes

STORY LINK Pound Sterling to Dollar Forecast: CIBC Sees 1.37 Year-End Despite Risk-Off Slide

The Pound to Dollar exchange rate (GBP/USD) slipped back to 1.3415 after failing to hold 10-day highs, with risk aversion blunting Sterling gains.

CIBC analysts maintain a year-end target of 1.37 but warn volatility will persist as US banking fears resurface.

GBP/USD Forecasts: Unable to Make Headway

The Pound to Dollar (GBP/USD) exchange rate strengthened to 10-day highs at 1.3470 during Friday’s Asian session before a retreat to around 1.3415 as the dollar recovered ground.

The dollar was hurt by fresh concerns over US regional banks and very strong expectations of further Federal Reserve rate cuts, but the Pound was undermined by a notable deterioration in risk appetite.

UoB does not expect a break of resistance; “Although there has been no clear increase in upward momentum, today there is a chance for GBP to test 1.3475 today. Based on the current momentum, a continued advance above this level is unlikely.”

CIBC has a year-end GBP/USD forecast of 1.37.

US equities dipped after warnings of loan-related losses from Zions Bancorp and Western Alliance Bancorp.

The S&P Regional Banks Select Industry Index declined by -6.3% and the largest daily decline since the sell-off in April triggered by President Trump’s “Liberation Day” tariffs announcement.

After a significant setback on Wall Street, the FTSE 100 index posted significant losses with notable declines in the banking sector.

Weaker risk conditions are an important negative factor for the Pound with investors also still wary over the UK fundamentals.

Richard Hunter, head of markets at interactive investor commented; “There are increasing signs of storm clouds gathering over markets, with little relief from the building wall of worry.”

He added; “Already grappling with stretched stock valuations in the AI space, an unresolved government shutdown and a deteriorating relationship between Beijing and Washington, investors were exposed to a new source of concern in the form of lending practices and bad loans for US regional banks.”

Overnight, Fed Governor Waller backed a further rate cut at the October meeting despite a lack of official data and there has been a further shift in market pricing.

Traders are pricing in over an 80% chance that rates will be cut again in December, but there is now close to a 20% chance of a more aggressive 50 basis-point cut at that meeting.

Domestically, Bank of England (BoE) chief economist Pill maintained a relatively hawkish stance in comments on Friday.

According to Pill, the bank needs to recognise that CPI stubbornness is more pressing and that the policy committee should adopt a more cautious pace of easing.

He did, however, add that he does see rate cuts if the economy evolves as forecast.

If the BoE holds firm and the Fed does deliver sharp rate cuts, yield spreads could underpin the Pound in global markets.

There will, however, be the risk that the BoE narrative changes

CIBC commented on BoE expectations; “we remain mindful of the market underpricing risks of a December adjustment.”

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TAGS: Pound Dollar Forecasts