GBP/USD Price Forecast: Pound Sterling Holds Near 1.33 on Safe-Haven Demand

Modified: Thursday, 23 October 2025 23:30 BST - Written by Tim Boyer

STORY LINK GBP/USD Price Forecast: Pound Sterling Holds Near 1.33 on Safe-Haven Demand

The Pound to US Dollar exchange rate (GBP/USD) was little changed on Thursday, as renewed US-China trade tensions lifted demand for the safe-haven Dollar while dovish Bank of England (BoE) expectations weighed on Sterling.

At the time of writing, GBP/USD was trading at 1.3329, down 0.15% on the day.

The US Dollar (USD) held firm throughout Thursday’s European session, finding support as risk sentiment soured amid reports of renewed trade strains between Washington and Beijing.

According to sources, the Trump administration is weighing new restrictions on software and technology exports to China — a move that reignited investor caution and encouraged a shift into safer assets.

Despite a quiet US data calendar, the ‘Greenback’ advanced against risk-sensitive currencies, underpinned by the day’s risk-off tone and speculation that the Federal Reserve may proceed cautiously with future rate cuts.

The Pound (GBP), meanwhile, struggled to regain momentum after Wednesday’s weaker-than-expected inflation data continued to drag on sentiment.

The softer September CPI reading has led investors to bring forward expectations for BoE rate cuts, with some now predicting a potential move as early as December.

As a result, Sterling traded in a narrow range on Thursday, with market participants largely unwilling to rebuild long GBP positions ahead of key UK data due on Friday.

GBP/USD Forecast: Retail Sales and Inflation Data to Drive Direction

Friday brings a busy data slate for both sides of the pair that could inject fresh volatility into GBP/USD.

In the UK, retail sales for September are forecast to fall by -0.2%, pointing to subdued household spending and adding to evidence of a cooling economy.

However, a modest uptick in the UK’s preliminary services PMI could provide partial relief, signalling that the broader economy retains some resilience despite weakening demand.

Across the Atlantic, attention turns to the latest US inflation figures, with headline CPI expected to rise from 2.9% to 3.1%, while core inflation is seen holding steady.

Stronger-than-forecast readings could bolster the Dollar by tempering expectations for near-term Fed rate cuts, while a softer outcome may trigger renewed USD selling pressure into the weekend.

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TAGS: Pound Dollar Forecasts