British Pound to Dollar Forecast: GBP Supported Above 1.32 After Choppy Budget Trading

Modified: Thursday, 27 November 2025 09:05 BST - Written by Frank Davies

STORY LINK British Pound to Dollar Forecast: GBP Supported Above 1.32 After Choppy Budget Trading

The Pound to Dollar exchange rate (GBP/USD) surged to four-week highs above 1.32 after chaotic budget leaks triggered short covering and coincided with a softer US dollar.

A sustained break higher would ease downside risks, though questions remain over whether gains can hold.

Markets now turn to gilt stability and Fed-cut expectations to gauge the next leg for Sterling.

GBP/USD Forecasts: 4-Week Highs

There was choppy Pound trading surrounding the UK budget, especially as the measures and forecasts were mistakenly published ahead of the formal budget speech.

The Pound secured short covering while the dollar held a soft tone in global markets.

The Pound to Dollar rate dipped to lows below the 1.3150 level before rallying to 4-week highs above 1.32.

A sustained move above 1.32 would lessen underlying downside currency risks, but there will still be doubts whether gains can hold.

Macquarie Group's global FX and rates strategist, Thierry Wizman commented; “Speculative and hedging activity against the GBP has stepped up in the multi-week lead-up to the UK's Autumn Budget statement. The currency could see a relief rally, albeit temporarily, if the budget is seen to be "fiscally responsible".”

There was high volatility in the bond market. The 10-year yield briefly dipped to 4.43% before jumping back to 4.53% and then retreating again to 4.45%.

The main budget points had all been leaked or announced in advance.

As expected, personal tax allowances will be frozen, but for a further three years to 2030/31 compared with the 2 years expected.

The borrowing requirement estimate for 2025/26 has been increased to £138.3bn from the March estimate of £117.7bn.

The budget deficit is forecast to decline to 4.5% of GDP in 2025/26 to 1.9% in 2030/31.

The Office for Budget Responsibility (OBR) lowered the medium-term UK productivity growth forecast to 1.0% from 1.3% previously with average GDP growth lowered to 1.5% from the 1.8% projected in March.

According to the OBR, there will be a net tax increase of £26.1bn by 2029/30.

The amount of fiscal headroom is projected to increase to £21.7bn from £9.9bn in March.

Investec Chief Economist Philip Shaw commented; “from what we can see at the moment, the fiscal numbers look relatively benign, with the government on track to meet its fiscal rules more comfortably than expected."

According to Berenberg Senior UK Economist Andrew Wishart; "The headroom has increased and more importantly we can see a tightening in the budget deficit over the next two years and that supports the argument for BOE rate cuts."

The dollar overall remained on the back foot amid strong expectations that the Fed would deliver another rate cut at the December meeting.

There were also reports overnight that Kevin Hassett was emerging as the front-runner to be named as the next Fed Chair.

Hassett would be likely to be a notably dovish appointment which undermined the dollar.

ING commented; “Hassett is one of the most dovish candidates, and his nomination could prompt markets to revise the terminal rate lower (now just below 3.0%) and weigh on the dollar.”

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TAGS: Pound Dollar Forecasts