GBP to USD Forecast: Pound Sterling Rangebound While Fed Uncertainty Builds

Modified: Tuesday, 9 December 2025 21:31 BST - Written by Tim Boyer

STORY LINK GBP to USD Forecast: Pound Sterling Rangebound While Fed Uncertainty Builds

The Pound to US Dollar exchange rate (GBP/USD) drifted through Tuesday’s session with little conviction, as traders positioned themselves cautiously ahead of Wednesday’s Federal Reserve interest rate decision.

At the time of writing, GBP/USD was trading around $1.3323, showing minimal movement from the day’s opening levels.

The US Dollar (USD) traded without clear direction on Tuesday, with markets unwilling to commit ahead of the Federal Reserve’s imminent policy announcement.

While the Fed is widely expected to deliver a 25bps rate cut, the real uncertainty lies in the central bank’s forward guidance. Investors remain unclear on how aggressively — or cautiously — policymakers intend to ease monetary conditions in the coming months.

Split views within the Federal Open Market Committee (FOMC) have contributed to this uncertainty. Some officials warn that stubborn inflation limits the scope for meaningful cuts, while others point to signs of cooling in the US labour market as evidence that additional policy support is needed.

This lack of consensus has left traders hesitant, keeping the Dollar subdued as they await clearer direction from the Fed.

The Pound (GBP) spent much of Tuesday moving sideways, with a lack of fresh UK economic data leaving traders with little impetus to reposition.

A broadly indecisive market mood added to the inertia. With sentiment still fragile, the increasingly risk-sensitive Pound found itself confined to a tight trading band.

GBP/USD Forecast: Fed Decision to Steer Direction

Focus now turns to Wednesday’s Federal Reserve announcement, where policymakers are expected to deliver a 25bps rate cut. However, the key market catalyst will be the tone of Chair Jerome Powell’s accompanying commentary.

If Powell strikes a firm note — signalling reluctance to accelerate the pace of easing despite political pressure from President Donald Trump — the US Dollar may find renewed support.

Conversely, if Powell hints that the FOMC is becoming more open to deeper or more frequent rate cuts in the months ahead, USD could weaken further.

With no major UK releases scheduled midweek, the Pound is likely to remain without a strong domestic catalyst, leaving GBP/USD movement highly sensitive to US monetary policy signals.

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TAGS: Pound Dollar Forecasts