GBP/USD Forecast: Pound Sterling Rangebound Ahead of Key Services Data

Modified: Tuesday, 2 December 2025 22:16 BST - Written by Ben Hughes

STORY LINK GBP/USD Forecast: Pound Sterling Rangebound Ahead of Key Services Data

The Pound to Dollar exchange rate (GBP/USD) traded within a narrow band on Tuesday, supported by increasingly dovish expectations for the Federal Reserve.

At the time of writing, GBP/USD was trading around $1.3194, almost unchanged from its opening levels.

The US Dollar (USD) struggled for direction on Tuesday as markets ramped up bets on a December Fed rate cut.

Pricing now implies an 87% probability of a 25bps reduction next week, with investors increasingly convinced the Fed will need to ease policy again as signs of cooling demand accumulate.

Dovish positioning was reinforced by reports that President Donald Trump may soon nominate Kevin Hassett — his top White House economic adviser — to replace Jerome Powell as Fed Chair when Powell’s term ends in May.

Hassett is widely viewed as favouring more aggressive interest rate cuts, fuelling speculation that the Fed’s easing cycle could accelerate in 2025 if he is confirmed.

These developments kept the US Dollar’s upside firmly capped, even as a modest pullback in risk appetite offered some limited support.

The Pound (GBP) lacked momentum on Tuesday, drifting in directionless trade amid a clear absence of UK economic catalysts.

With no major data releases to materially influence sentiment on the UK’s growth outlook or the Bank of England’s (BoE) next policy move, traders kept GBP positioning light.

Lingering uncertainty over the UK’s economic trajectory — and whether the BoE will deliver another rate cut in December — also contributed to Sterling’s subdued tone.

GBP/USD Forecast: Slowdown in US Services PMI to Drag on the Dollar?

Looking ahead to midweek trade, movement in the Pound to US Dollar exchange rate is likely to be driven by the latest ISM services PMI.

Following October’s strong rebound, November’s index is expected to show a cooldown in activity. A downside surprise — mirroring Monday’s weaker ISM manufacturing reading — could weigh heavily on the US Dollar by reinforcing expectations for further Fed easing.

In the UK, the final services PMI is expected to confirm a sharp slowdown in November as businesses paused hiring and investment decisions ahead of Chancellor Rachel Reeves’s autumn budget. This may keep the Pound contained even if USD sentiment softens.

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TAGS: Pound Dollar Forecasts