GBP to USD Forecast: Pound Sterling Weakens on Equity Selloff, Safe-Haven Demand

Modified: Tuesday, 18 November 2025 23:00 BST - Written by David Woodsmith

STORY LINK GBP to USD Forecast: Pound Sterling Weakens on Equity Selloff, Safe-Haven Demand

The Pound to US Dollar exchange rate (GBP/USD) softened on Tuesday as a sharp equity selloff unsettled investors and pushed demand back toward safer assets.

At the time of writing, GBP/USD was trading around $1.3141, down almost 0.2% from the start of the session.

The US Dollar (USD) inched higher on Tuesday, with risk-off sentiment driving flows into the safe-haven currency.

Mounting concerns over overstretched valuations in AI-linked stocks sparked a wave of caution across global markets, with analysts increasingly warning that the sector may be entering bubble territory.

The mood was further underpinned by a hawkish repricing of Federal Reserve interest rate cut expectations, keeping USD supported through the session.

Sterling struggled to gain traction on Tuesday as investors remained hesitant ahead of next week’s tightly watched autumn budget.

Recent reports have raised more questions than answers regarding Chancellor Rachel Reeves’s fiscal plans. Most notably, Reeves appeared to drop her consideration of an income tax rise, viewed by many economists as the most efficient way to raise revenue and close the estimated £20bn fiscal gap.

Without that lever, Reeves may be forced to rely on a mosaic of smaller tax hikes.

GBP investors fear this approach risks complicating the tax landscape while doing little to revive the UK’s fragile growth outlook.

GBP/USD Forecasts: Soft UK Inflation to Reinforce BoE Rate Cut Bets?

Looking ahead, the Pound to US Dollar exchange rate looks vulnerable on Wednesday as markets brace for the UK’s latest consumer price index.

Economists expect headline inflation to ease from 3.8% to 3.6% in October—the first cooling of prices since May.

A softer reading would likely cement expectations that the Bank of England (BoE) will restart its rate-cutting cycle in December, which could weigh on Sterling.

Also on the radar are the Federal Reserve’s latest meeting minutes. Should the minutes strike a hawkish tone or cast doubt on a December rate cut, the US Dollar may find fresh support.

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TAGS: Pound Dollar Forecasts