British Pound to Dollar Forecast: GBP Pauses <1.32 as Budget, Fed Risks Loom

Published: Tuesday, 18 November 2025 09:30 BST - Written by David Woodsmith

STORY LINK British Pound to Dollar Forecast: GBP Pauses <1.32 as Budget, Fed Risks Loom

The Pound-to-Dollar exchange rate (GBP/USD) held around 1.3170 on Monday as markets braced for one of the most important data weeks of the quarter, with UK inflation and delayed US jobs figures set to steer rate expectations on both sides of the Atlantic.

GBP/USD Forecasts: Consolidating Below 1.32

The Pound to Dollar rate has not been able to make another challenge on 1.32 and is trading close to 1.3170 with markets tense ahead of key data releases and braced for further policy hints from the UK government.

The UK 10-year bond yield edged lower to 4.56% from 4.58% which helped stabilise confidence.

According to UoB; “today, we continue to expect GBP to trade between 1.3120 and 1.3200.”

CIBC expects no GBP/USD change by the end of 2025 with a peak at 1.36 for the second quarter of 2026.

UK fiscal and monetary policy developments will be key elements this week with the latest inflation data on Wednesday.

Consensus forecasts are for the headline rate to retreat to 3.6% from 3.8% with the core rate declining slightly to 3.4% from 3.5%. There has been a jump in expectations surrounding a December Bank of England rate cut and softer than expected data would reinforce this trend.

Evidence of sticky inflation, however, would risk a reassessment of the outlook.

As far as fiscal policy is concerned, there is still a high degree of uncertainty and unease over the budget following Friday’s U-turn on income tax hikes.

Scotiabank noted Friday’s hit to confidence; “While the revisions are welcome from a fiscal standpoint, they are worrisome from a market perspective, offering malleability as markets seek stability.”

As far as the US is concerned, the release of the delayed October jobs data is due on Thursday.

Consensus forecasts are for a small increase in non-farm payrolls for the month, but with a high degree of uncertainty while the BLS has indicated that the household data, including the unemployment rate, will not be released.

Fed minutes from October’s meeting will be released on Wednesday.

There has been a further shift in pricing for the December Federal Reserve policy meeting with traders now pricing in only around a 45% chance of a further cut in interest rates.

ING commented; “Presumably, the Federal Reserve is far happier with that kind of pricing, given the lack of available data currently. This also means that the dollar may not have to rally too far on Wednesday evening's event risk of the FOMC minutes of that 28-29 October policy meeting.”

CIBC expects a decline in labour supply will lessen the risk of higher unemployment and added; “For this reason, we see Powell pausing at the December FOMC meeting, which may put very near-term upwards pressure on the US dollar.”

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TAGS: Pound Dollar Forecasts