Pound to Dollar Forecast: Focus Turns to Fed, UK Budget

Modified: Sunday, 26 October 2025 20:30 BST - Written by Frank Davies

STORY LINK Pound to Dollar Forecast: Focus Turns to Fed, UK Budget

The Pound to Dollar exchange rate (GBP/USD) steadied just above 1.33 heading into the new week after briefly dipping to 10-day lows late Friday.

Pound Sterling struggled to find lasting traction despite encouraging UK data, as markets digested US inflation figures and renewed trade tensions.

GBP/USD Forecasts: Sterling Finds Support but Sentiment Fragile

The US September inflation release came broadly in line with expectations, with headline CPI edging up to 3.0%, below the 3.1% consensus. The outcome reinforced expectations of a Federal Reserve rate cut this month, though traders remain wary of further geopolitical and fiscal risks.

According to UoB, “Downward momentum has increased further, but for a continued decline, GBP must first close below 1.3295.”

Scotiabank noted some tentative optimism for the Pound, stating that “options market data show a continued fade in the premium for protection against GBP weakness.” The bank, however, added that the UK’s fiscal backdrop remains a major headwind: “Media remain intensely focused on potential measures to be included in the November 26 budget release.” Near-term support is pegged at 1.33.

Danske Bank maintains a 12-month GBP/USD forecast of 1.37, citing expectations of a weaker dollar over the longer term.


The greenback held firm after Friday’s inflation data, supported by slightly higher oil prices and lingering caution over trade and government shutdown risks.

MUFG highlighted that persistent policy uncertainty continues to undermine confidence: “The constant uncertainty over trade policy cannot be a positive for US business planning and prospects of a deal between the US and Canada took a knock when President Trump announced that trade negotiations were off following anti-tariff ads aired by Ontario.”

Meanwhile, ING warned that energy developments could bolster the dollar: “A meaningful reduction in Russian oil supply could drive Brent prices back to the $70-75 range. These are levels that would drive some noticeable dollar appreciation.”

Domestic data offered mild encouragement for the UK. Retail sales volumes rose 0.5% in September versus expectations for a 0.2% decline, while the UK composite PMI climbed to a two-month high of 51.2, underpinned by a rebound in manufacturing.

For those with upcoming USD purchases or international payments, recent volatility shows how quickly market sentiment can shift around economic data and fiscal speculation. Compare today and secure a stronger rate before further swings.

With another pivotal Bank of England meeting and the November budget approaching, both monetary and fiscal narratives are likely to dominate the week ahead.

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TAGS: Currency Predictions Pound Dollar Forecasts