Pound Sterling Forecast: Budget Scrutiny Keeps GBP/USD Rangebound

Modified: Thursday, 27 November 2025 22:01 BST - Written by Frank Davies

STORY LINK Pound Sterling Forecast: Budget Scrutiny Keeps GBP/USD Rangebound

The Pound to US Dollar exchange rate (GBP/USD) drifted on Thursday as investors continued to absorb the details of the UK’s autumn budget and assess its broader implications.

At the time of writing, GBP/USD was hovering near $1.3243, slightly below the session’s earlier peak of $1.3267.

The Pound (GBP) began Thursday on solid ground, still benefitting from the initial wave of optimism following the unveiling of the UK’s autumn budget.

However, that momentum quickly faded. As traders scrutinised the finer points of Chancellor Rachel Reeves’s fiscal plans, some of the early cheer gave way to caution, pushing Sterling back onto a softer footing.

Markets had initially welcomed Reeves’s move to carve out £22bn in fiscal headroom, but unease grew over the structure and timing of the tax measures. Much of the adjustment is pushed into the later years of the forecast period — close to the next general election — raising questions over whether those measures will be fully implemented.

Meanwhile, expectations for a December Bank of England (BoE) interest rate cut edged higher, with markets placing the probability closer to 90%. This further dampened appetite for the Pound.

By late morning, Sterling had slipped back from recent highs and settled into a narrow, cautious range, mirroring the more subdued market mood.

The US Dollar (USD) traded sideways on Thursday, muted by the Thanksgiving holiday closure in US markets.

The lack of liquidity offered the ‘Greenback’ a measure of insulation, softening the impact of modest risk-on sentiment and lingering expectations that the Federal Reserve could cut interest rates in December.

With trading activity significantly thinned and few fresh catalysts emerging, USD movement remained restrained throughout the session.

Pound to US Dollar Outlook: Market Mood to Drive Movement?

With limited UK and US data scheduled for Friday, the Pound to US Dollar exchange rate is likely to take its direction from broader market sentiment.

Risk appetite may prove the primary driver. A more upbeat tone would typically support the increasingly risk-sensitive Pound, allowing it to gain ground against the US Dollar. Conversely, if sentiment sours — for instance, if optimism surrounding potential progress in Ukraine–Russia peace discussions begins to fade — the safe-haven ‘Greenback’ could firm and exert downward pressure on GBP/USD.

At the same time, markets will continue digesting the UK’s autumn budget. Rising expectations of further BoE rate cuts, fiscal concerns, and ongoing doubts about the UK’s growth outlook may all temper Sterling’s ability to hold onto this week’s gains.

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TAGS: Pound Dollar Forecasts