Pound to Dollar Price Forecast: USD Steady after Powell Damps Rate Cut Hopes

Modified: Friday, 31 October 2025 07:00 BST - Written by Frank Davies

STORY LINK Pound to Dollar Price Forecast: USD Steady after Powell Damps Rate Cut Hopes

Pound Sterling Muted despite Hawkish Fed Comments

The Pound US Dollar (GBP/USD) exchange rate traded broadly sideways on Thursday as investors digested the Federal Reserve’s latest policy decision and assessed its implications for future rate cuts.

The US Dollar (USD) held firm following Wednesday night’s Federal Reserve interest rate cut, with policymakers opting for a widely expected 25-basis-point reduction.

However, the accompanying guidance was notably hawkish, limiting downside pressure on the Greenback.

Fed Chair Jerome Powell surprised investors by signalling that a further cut in December was “not a foregone conclusion,” cautioning markets against assuming a steady easing cycle.

According to ING, “The dollar is broadly, albeit modestly, stronger after last night's FOMC statement and press conference… Powell emphasised that a December rate cut was not a foregone conclusion. That saw pricing of a 25bp December rate cut drop to 70% from around 100% prior.”

ING added that the Fed “would now argue that a 70% probability is still too high,” noting that investors scaled back expectations for aggressive easing, producing a bearish flattening of the yield curve that helped support the Dollar against low-yielding peers.

The Pound (GBP), meanwhile, showed little momentum through Thursday’s session, with sentiment dampened by ongoing UK fiscal uncertainty.

Markets remained wary ahead of Chancellor Rachel Reeves’s Autumn Budget, amid speculation that higher taxes and tighter spending controls may feature prominently as the government looks to plug a £20bn fiscal shortfall.

The lack of fresh UK data left Sterling directionless, though analysts noted that its recent weakness was driven more by Bank of England expectations than by fiscal fears.

ING commented: “We had quite a few questions from journalists yesterday about the sterling sell-off… We see the sterling move much more from the Bank of England perspective. Here, investors expect UK Chancellor Rachel Reeves to hold the line on her fiscal rules and perhaps deliver greater fiscal tightening… This means that the BoE will have to take the strain by lowering interest rates earlier.”

As a result, the Pound remained confined to narrow ranges through Thursday’s European session, failing to mount any meaningful recovery.

GBP/USD Forecasts: Risk Mood to Steer Late-Week Direction

Looking ahead, with no major economic data due from either the UK or the US, broader market sentiment will likely dictate GBP/USD movement into the weekend.

If risk appetite fades following the Fed’s hawkish tone, the Dollar may retain its advantage amid safe-haven demand.

Conversely, a brighter global mood—particularly if optimism surrounding US-China trade talks improves—could see Sterling claw back some ground after a week of steady declines.

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TAGS: Pound Dollar Forecasts