Pound Sterling to Dollar Forecast: USD Firm, GBP Awaits BoE Clarity

Published: Monday, 3 November 2025 14:30 BST - Written by Frank Davies

STORY LINK Pound Sterling to Dollar Forecast: USD Firm, GBP Awaits BoE Clarity

The Pound to Dollar exchange rate (GBP/USD) remains pinned near six-month lows, trading around 1.3130 as investors continue to favour the dollar amid fading expectations of another Federal Reserve rate cut in December.

GBP/USD Forecasts: Close to 6-Month Lows

The Pound-to-Dollar rate dipped further to 6-month lows at the 1.3100 level on Friday before a slight recovery to 1.3130 on Monday.

The dollar has maintained a strong tone in global markets with further doubts over another rate cut in the December meeting while US money-market conditions remain tight.

For the Pound to secure a sustained rebound, the first task for GBP/USD will be to regain 1.3140 on a sustained basis.

A slide below 1.3100 would potentially lead to a slide to 1.30.

According to UoB; “The rebound from deeply oversold conditions suggests that, instead of continuing to decline, GBP is more likely to consolidate today, probably between 1.3110 and 1.3170.”

Over the past few days, three regional Fed Presidents have stated that they preferred to leave rates on hold at the late-October meeting.

MUFG commented; “The change in rhetoric from Fed Chair Powell was likely intended to appease more hawkish voices at the Fed while they await more clarity from economic data releases when the US government shutdown finally ends.

With the on-going government shutdown still disrupting official data releases, the private surveys on economic activity and the labour market will be watched very closely this week.

National Australia Bank senior FX strategist Rodrigo Catril commented; "The lack of information is playing to sort of that calmness in markets. And for now, I suppose what could break that while the shutdown is still ongoing, (is) a big downward surprise or even upward surprise in terms of surveys or private data releases."

He added; "But otherwise, at the moment, even those private data releases are not screaming or telling us that the Fed should be moving in a hurry."

Domestically, the UK PMI manufacturing index was revised marginally higher to 49.7 from the flash reading of 49.6 and confirmed at a 12-month high.

Rob Dobson, Director at S&P Global Market Intelligence “The October PMI survey shows UK manufacturing production rising for the first time in a year, which is a positive in itself. However, there are real concerns that the bounce could prove short-lived.”

Markets will continue to focus on this Thursday's Bank of England policy decision with the actual decision and policy guidance both crucial. Rate-cut speculation will make it more difficult for the Pound to recover ground.

According to ING; “The Bank looks likely to keep rates on hold on 6 November, despite better inflation and wage news. The committee is deeply divided, and we don't expect clear signals on the Bank's next steps. But assuming the Autumn Budget goes as expected, a December rate cut now looks more likely than not.”

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TAGS: Pound Dollar Forecasts