Pound to Dollar Forecast: GBP/USD Expected to Stabilise with Budget Risk Already Priced

Modified: Tuesday, 25 November 2025 10:05 BST - Written by Ben Hughes

STORY LINK Pound to Dollar Forecast: GBP/USD Expected to Stabilise with Budget Risk Already Priced

The Pound to Dollar exchange rate (GBP/USD) edged up to 1.3128 on Tuesday but remains trapped between 1.30 support and resistance near 1.32 as traders brace for a pivotal UK budget and shifting Fed expectations.

Analysts argue much bad news is already priced in, hinting at modest Pound upside if fiscal credibility holds. Dollar direction now hinges on whether Fed officials revive the case for a December rate cut.

GBP/USD Forecasts: GBP Pessimism Overdone?

UoB expects further near-term range trading; “Today, GBP could trade between 1.3065 and 1.3125.”

There will be key domestic and US developments during the week and narrow ranges are unlikely to be sustainable even with the US Thanksgiving Holiday on Thursday.

The 1.30 support area remains crucial for GBP/USD while move above 1.32 is needed to ease underlying pressure.

The UK budget and bond-market reaction will be crucial during the week.

Danske Bank commented; “Gilts and GBP will be sensitive to how an inevitable fiscal tightening looks and whether the fiscal gap is plugged sufficiently.”

Scotiabank notes that Sterling was broadly resilient on Friday despite weak data and added; “Sentiment for the UK and GBP remain weak heading into the November 26 budget release however we feel that the balance of risk is tilted to the upside as much of the bad news is already priced in.”

Credit Agricole is also positive on the Pound; “we continue to think that many negatives related to the autumn statement and its potential negative economic impact are in the price of the GBP.

It added; “We further note that the GBP is trading at a discount relative to the UK sovereign credit CDS spread. In all, we expect the GBP to stabilise in the absence of significant growth-negative surprises from the budget.”

US developments will also be crucial during the week.

There was a renewed shift in Federal Reserve interest rate expectations of Friday after New York Fed President Williams suggested that there is scope for a further near-term cut in interest rates.

Traders now see the chances of a December cut at around 75% from 30% earlier last week.

According to ING; “The September retail sales data released tomorrow should be quite strong, but the market will probably have more interest in the Beige Book. Here, any anecdotal evidence from the Fed's 12 reporting districts that the slowdown in employment is broadening could put the notion of a Fed December rate cut back on the agenda.”

MUFG had expected the Fed to hold rates in December, but added; “However, it appears that the Fed leadership including Chair Powell will still try to push through another rate cut even if there is more dissent from hawkish participants. A development that would curtail further upside for the US dollar heading into year end.”

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TAGS: Pound Dollar Forecasts