GBP/USD Price Forecast: Pound Sterling Soft, Underperforms G10 Currencies

Modified: Monday, 20 October 2025 22:16 BST - Written by David Woodsmith

STORY LINK GBP/USD Price Forecast: Pound Sterling Soft, Underperforms G10 Currencies

The Pound US Dollar exchange rate (GBP/USD) was mostly rangebound on Monday amid a lack of both UK and US data releases.

At the time of writing, GBP/USD was trading at approximately $1.3437, virtually unchanged from the start of Monday’s session.

The US Dollar (USD) held largely steady against most of its major peers on Monday, as a lack of significant US economic releases left the currency without a clear directional driver.

Ongoing uncertainty surrounding the government shutdown has led to the postponement of several key data releases, limiting opportunities for USD investors to take decisive positions.

As a result, the ‘Greenback’ traded in a tight range throughout Monday’s European session, struggling to make any meaningful gains against its rivals.

The Pound (GBP) also treaded water against most of its major peers on Monday, as the absence of notable UK economic releases left Sterling without a clear catalyst.

With no fresh domestic data to influence movement, investors remained cautious, holding back from making significant bets on the currency ahead of this week’s key releases, including the UK’s consumer price index (CPI) due on Wednesday.

As such, GBP exchange rates stayed largely rangebound throughout Monday’s European session, with the currency showing little momentum and remaining subdued against its major counterparts.

Adding to the subdued tone, analysts at Scotiabank highlighted that Sterling began the week on a softer footing, struggling to gain traction against most of its G10 peers.

Chief FX Strategist Shaun Osborne noted that while the Pound remains relatively stable, underlying sentiment and positioning continue to act as key near-term drivers.

According to Osborne: “The GBP is soft, down a marginal 0.1% vs. the USD and underperforming most of the G10 currencies into Monday’s NA open. This week’s release calendar is dominated by Wednesday’s CPI and Friday’s retail sales. Preliminary PMI’s will also be released on Friday. Fundamentals remain a secondary driver for the pound, as yield spreads extend their two-month consolidation and correlation studies reveal a newly negative relationship between GBP and spreads. Sentiment appears to be more dominant as a near-term driver, with risk reversals showing a 0.64 correlation to GBP on a 21-day rolling basis. Risk reversals remain deeply negative (pricing a premium for puts) but appear to be in the early stages of a recovery.”

Looking ahead to Tuesday’s European session, the GBP/USD exchange rate is expected to be shaped primarily by a speech from Federal Reserve official Christopher Waller, as both the US and UK economic calendars remain notably quiet.

Last week, Waller signalled the possibility of another US interest rate cut this year, citing ongoing concerns over the labour market and broader economic conditions.

Should he echo these dovish remarks this week, the ‘Greenback’ could come under renewed pressure, potentially seeing USD exchange rates slip against its major rivals.

Meanwhile, the UK data calendar is also devoid of notable releases, leaving Sterling without fresh domestic catalysts once more.

In this environment, GBP exchange rates are likely to remain confined within a narrow range, with trading largely guided by market sentiment and risk appetite rather than fundamental data.

Investor attention is expected to remain focused on Wednesday’s CPI release, meaning traders may continue to exercise restraint, maintaining a cautious approach and limiting significant GBP/USD movement ahead of the key inflation figures.

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TAGS: Pound Dollar Forecasts