British Pound to Dollar Forecast: GBP/USD Slips to 1.31 After Weak UK GDP

Modified: Thursday, 13 November 2025 07:45 BST - Written by Frank Davies

STORY LINK British Pound to Dollar Forecast: GBP/USD Slips to 1.31 After Weak UK GDP

The Pound to Dollar exchange rate (GBP/USD) slipped to 1.3120 on Thursday after fresh UK data showed the economy flatlined in September, underscoring sluggish growth and compounding political and fiscal uncertainty.

Pound Sterling remains under pressure as traders digest signs of stagnation and rising speculation over Prime Minister Starmer’s leadership.

GBP/USD Forecasts: Sterling Retreats

The British Pound was subjected to renewed selling on Wednesday with a fresh spike in political tensions increasing unease and uncertainty surrounding government policy with potentially important implications for fiscal and monetary policy.

GBP has again been unable to take advantage of strength in equity markets and a weaker dollar which indicates underlying Sterling vulnerability.

After failing to break the 1.3200 level, the Pound to Dollar (GBP/USD) exchange rate has retreated to 1.3120.

UoB expects further underlying range trading, but a break below 1.3120 would increase potential vulnerability with key GBP/USD support at 1.30.

Overnight, there was a strong briefing from within the Downing Street machinery that Prime Minister Starmer would fight back strongly against any leadership challenge.

The briefing, however, has served to heighten speculation that Starmer could be under threat.

The timing is potentially very important ahead of the November 26th budget.

Rabobank senior forex strategist Jane Foley commented; "Weak UK growth fiscal difficulties and the current low popularity ratings of both (finance minister Rachel) Reeves and prime minister (Keir) Starmer also hint at political headwinds ahead.”

Saxo Markets UK investor strategist Neil Wilson noted important risks; “Instability with the politics means fiscal instability, which means market instability re gilts - perhaps baking in a premium for an even more left-leaning, tax-and-spend government.”

He noted the importance of fiscal rules and added; “we are heading to a fiscal showdown and political crisis that will show up in volatility in gilts and sterling – potentially a serious wobble in the pound if gilts run.”

The UK bond market will, therefore, remain a key focus as an indicator of underlying stresses. The 10-year yield has increased today to near 4.43% from 4.39%.

The latest UK GDP data is due for release on Thursday. Consensus forecasts are for no growth for September with 0.2% growth for the third quarter.

Commerzbank commented; “Better figures would certainly be helpful here, even though the combination of recent data increasingly suggests that the Chancellor is facing a Herculean task with her new budget at the end of the month.”

It added; “Given this unfavourable combination, the risks for the pound are likely to continue to lean towards further depreciation."

US labour-market data will continue to be watched very closely with any House of Representatives vote in favour of the bill to re-open the government, putting markets on high alert for the release of delayed data.

According to ING; “While we would love to say that the dollar made a significant high last week, the catalysts for it to come lower are not obvious right now.”

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TAGS: Pound Dollar Forecasts