Pound to Dollar Week Ahead Forecast: Near-Term GBP/USD Rangebound

Modified: Monday, 20 October 2025 14:00 BST - Written by James Fuller

STORY LINK Pound to Dollar Week Ahead Forecast: Near-Term GBP/USD Rangebound

The Pound to Dollar exchange rate (GBP/USD) endured choppy trading through the week, supported by dollar weakness but capped by UK fiscal uncertainty.

Some analysts forecast a multi-year climb to 1.43 by 2026, while others expect the GBPUSD to stay trapped between 1.32 and 1.37 through next year.

GBP/USD Forecasts: Choppy waters

After initial losses, RBC Capital Markets forecasts that GBP/USD will strengthen to 1.43 by the end of 2026 on dollar losses.

ING, however, has a 12-month forecast of 1.36 even with a weaker US currency.

After sliding to 10-week lows near 1.3250 during the week, GBP/USD secured a net gain to 1.3430 in choppy trading.

Risk appetite dipped late in the week on US-China fears and a slide in US banking stocks with traders also having to contend with the on-going US government shutdown while gold surged to a fresh record high as risk conditions remained a key focus.

Danske Bank commented on trade war fears; “The tariff escalation underscored two key points: first, that any renewed trade tensions under a Trump administration are unambiguously negative for the broad USD. Second, markets still view the announced measures largely as negotiation tactics rather than policy reality.”

Standard Chartered is relatively sanguine over the outlook; “We expect the US and China to reach a trade truce again as both sides have economic leverage to avoid a downward spiral.”

Rabobank noted a high degree of uncertainty over trade policy; “Whether both players have a full grasp of their own and their opponent’s tools and power(s) remains an open question.”

It also expects a radical shift in the global order which risks dramatic shifts and high volatility; “That said, it’s even harder to see the spirit going back into the bottle. In other words, the world is changing more rapidly and profoundly than many would have imagined only a few months ago.”

The debate over UK fiscal policy will continue to simmer.

According to ING; “The fiscal risks are more prevalent into the budget in November. We’re not looking for a gilt crisis, but the Chancellor is going to have to make some tough decisions on tax rises or spending cuts.”

It added; “Tighter fiscal and looser monetary policy should ultimately be a bit bearish for sterling – though GBP/USD should trade between 1.32-1.37.

According to RBC; “In the short-term, we think there is room for sterling to underperform, particularly against the USD where the strength in GBP over the last year looks overstretched.

It notes the importance of November’s budget; “Increasingly these announcements have had an FX impact, most notably in 2022. The Budget last year was poorly received by markets and sterling considerably weakened in the weeks that followed.”

RBC, however, expects a multi-year dollar downtrend which will underpin GBP/USD.

It noted; “These long-term trends are rooted in structural asset allocation shifts rather than short-term market fluctuations, reinforcing the idea that the USD’s depreciation is a multi-year process driven by fundamental factors.”

At this stage, markets are still backing very cautious Bank of England rate cuts.

In contrast, traders have fully priced in two further Fed rate cuts before the end of 2025.

Standard Chartered commented; “Over the next three to six months, we continue to expect the USD to weaken, due to a cooling U.S. labour market, slower wage growth, and a more dovish Federal Reserve stance.”

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TAGS: Pound Dollar Forecasts