Pound-to-Dollar Forecast: GBP Gains Limited Amid Weak UK Backdrop

Modified: Tuesday, 2 December 2025 09:02 BST - Written by Tim Boyer

STORY LINK Pound-to-Dollar Forecast: GBP Gains Limited Amid Weak UK Backdrop

The Pound to Dollar exchange rate (GBP/USD) held around 1.3230 as a softer dollar helped offset Sterling’s fragility on the crosses.

With markets confident of December cuts from both the BoE and the Fed, the pair’s upside hinges on whether dovish Fed signals deepen this week.

Confirmation of a dovish new Fed Chair could add further pressure on the dollar.

GBP/USD Forecasts: Creep Higher

The Pound to Dollar rate found support close to 1.3200 on Monday and settled around 1.3230 in European trading.

The dollar overall was weaker in global markets, but the Pound was unable to take advantage as it also lost ground on the crosses.

The Pound was hampered by weaker equities and underlying doubts surrounding the UK outlook.

Markets are also very confident that the Bank of England and Federal Reserve will cut rates in December, limiting relative moves.

According to UoB, there is scope for GBP/USD gains to 1.3300 as long as support around 1.3180 holds.

Standard Chartered commented; “The pair looks poised to break above its 50-day moving average and test its resistance near 1.34.”

On seasonal grounds, GBP/USD tends to perform well in December with the second-strongest performance after April.

The UK bond market was relatively stable on Monday with the 10-year yield around 4.46%, although there are still underlying reservations over the underlying pressures and substantial bond supply.

The US data and Federal Reserve developments will be key elements this week.

As far as data is concerned, the latest ADP data on private-sector jobs will be released on Wednesday with consensus forecasts of only a marginal monthly increase of around 20,000.

ING expects further dollar losses; “Considering that the dollar still hasn't fully absorbed the negatives of the recent dovish repricing, we continue to see risks on the downside for the US dollar this week as markets may well cement their cut expectations. There is also some chance that President Donald Trump will announce the next Fed Chair in the next few days. Expectations are that it will be dove Kevin Hassett – confirmation of which could weigh on the greenback.”

MUFG added; “If Kevin Hassett is confirmed as the next Fed Chair it would support our forecast for the US dollar to weaken further in the year ahead.”

The bank did, however, note that there are clear divisions within the Fed committee and added; “We expect more dissents this month if the Fed decides to lower rates again, and a more hawkish signal to indicate a pause at the start of next year. A more divided FOMC would make it harder for the new Fed Chair to continue lowering rates next year, and should help dampen the immediate negative USD reaction if Kevin Hassett is confirmed this week.”

According to Goldman Sachs, labour-market weakness will dominate; "Division on the committee is restraining more dovish pricing, but with a large amount of labor market data due before the January meeting we think too little is priced in Q1."

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TAGS: Pound Dollar Forecasts