British Pound to Euro, Dollar Forecast: GBP Under Pressure After Fed Decision

Modified: Thursday, 30 October 2025 22:15 BST - Written by Tim Boyer

STORY LINK British Pound to Euro, Dollar Forecast: GBP Under Pressure After Fed Decision

Further Erosion of Pound Sterling Support, GBP/USD Risks 6-Month Low

The British Pound has remained under pressure in global markets while the dollar maintains a firm overall tone.

The Pound to Dollar (GBP/USD) exchange rate dipped sharply to re-test the August 1st low just below 1.3150 before a tentative bounce to near 1.3200.

According to Scotiabank; “The mid-1.31 area is critical, reflecting the lower bound of the range since May.

ING added; “1.3140/50 is a big support area for GBP/USD, below which the move could extend to 1.2950/3000.”

If 1.3140 breaks, GBP/USD will hit a 6-month low.

The Pound to Euro (GBP/EUR) exchange rate hit fresh 30-month lows at 1.1340 before settling around 1.1360.

There has been a significant shift in interest rate expectations with markets now less confident that the Federal Reserve will cut rates again in December while expectations of a Bank of England November rate cut are building.

Scotiabank noted; “Interest rate differentials are moving against the pound as UK-US spreads extend their recent bearish reversal.”

As expected, the Federal Reserve cut interest rates by a further 25 basis points to 4.00%. There were two dissenters with Miran again calling for a 50 basis-point cut by Schmid backed no change in rates.

The Fed also announced that the bond-selling programme would be suspended from December 1st.

Fed Chair Powell stated that a December cut was not a foregone conclusion. He also noted that there was a wide range of views on the outlook for the next meeting.

ING commented; The Fed has cut rates again, but given tensions between its inflation goal, which remains above target, and its employment goal, it has warned that a December rate cut is not guaranteed. We still think they will end up lowering rates further.

Commonwealth Bank of Australia (CBA) currency strategist Carol Kong noted the high degree of uncertainty. "Clearly, the FOMC is divided on the policy outlook from here and with the government in shutdown still, I think Powell wants to approach policy more cautiously"

She added; "We still expect a cut in December, but obviously with Powell's cautious comments, the risk is that a rate cut is delayed to 2026."

There has also been a shift in Bank of England expectations following recent data and expectations of tax hikes.

Traders are now pricing in around a 40% chance of a cut next week, but expectations could shift further if momentum gathers pace.

Goldman Sachs, for example, has changed its BoE forecast and now expects the central bank will cut interest rates at next week’s meeting.

In this context, it expects further Pound vulnerability; "We think that dynamic can continue for sterling, where softer data and a reassessment of Bank of England easing can drive underperformance on European crosses.

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TAGS: Pound Euro Forecasts