GBP to USD Price Forecast: Pound Sterling Tumbles to 1.31 Amid Political Jitters

Modified: Wednesday, 12 November 2025 22:30 BST - Written by Frank Davies

STORY LINK GBP to USD Price Forecast: Pound Sterling Tumbles to 1.31 Amid Political Jitters

The Pound-to-US-Dollar exchange rate (GBP/USD) slipped on Wednesday as renewed UK political uncertainty weighed on Sterling, while the Dollar drew modest support from signs of progress toward ending the US government shutdown.

At the time of writing, GBP/USD was trading around $1.3166, down nearly 0.3% from the start of the session.

The Pound (GBP) came under fresh pressure after reports suggested Prime Minister Keir Starmer could face a leadership challenge earlier than expected.

According to sources close to Downing Street, frustration is growing among senior Labour figures over Starmer’s leadership style and weak public approval ratings.

The speculation follows months of internal discontent, but reports now suggest a potential move could come soon after the autumn budget, particularly if Chancellor Rachel Reeves’s fiscal plan fails to resonate with party members or the wider electorate.

The headlines compounded Sterling’s recent losses, coming on the heels of weaker UK employment data earlier in the week that fuelled expectations for a December Bank of England (BoE) rate cut.

Markets now see more than a 70% probability of a BoE move next month, with traders wary that fiscal tightening and political instability could further dent the UK’s growth prospects.

Meanwhile, the US Dollar (USD) firmed as investors welcomed signs that US lawmakers were closing in on a deal to end the government shutdown.

The House of Representatives appeared poised to pass a short-term funding bill that could see the federal government reopen before the weekend, though the measure’s limited timeline — extending only through January — capped optimism.

While the partial resolution boosted sentiment toward the Dollar, traders were also eyeing remarks from several Federal Reserve officials later in the day for fresh clues on the central bank’s next policy steps.

GBP/USD Forecast: Weak UK GDP Could Deepen Losses

Looking ahead, Friday’s release of UK GDP data will be the key driver for the Pound to Dollar exchange rate heading into the weekend.

Preliminary figures for the third quarter are expected to show growth slowing from 0.3% to 0.2%, reinforcing concerns that the UK economy is losing momentum under tightening fiscal and monetary conditions.

A weaker reading would likely pressure Sterling further and bolster expectations that the BoE will deliver another rate cut in December.

Across the Atlantic, confirmation that the US funding bill has passed could underpin confidence in the US economy, adding near-term support for the Greenback — particularly if upcoming Fed commentary remains cautious on further rate cuts.

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TAGS: Pound Dollar Forecasts