British Pound-to-Dollar Forecast: GBP Struggles to Hold 1.33 Ahead of Fed

Modified: Wednesday, 10 December 2025 11:31 BST - Written by David Woodsmith

STORY LINK British Pound-to-Dollar Forecast: GBP Struggles to Hold 1.33 Ahead of Fed

The Pound to Dollar exchange rate (GBP/USD) drifted toward 1.3315 as markets turned cautious ahead of the Fed decision and doubts emerged over how far US rates can fall next year.

Support above 1.33 looks fragile, especially if Powell delivers a hawkish tone alongside an expected cut.

With a BoE move also priced in for next week, direction now hinges on central-bank messaging.

GBP/USD Forecasts: Battles to Hold 1.33

The GBP to USD rate has not been able to make headway on Tuesday and has drifted to around 1.3315 amid narrow ranges.

According to UoB; “the price action still appears to be part of a range-trading phase. Today, we expect GBP to trade between 1.3290 and 1.3350.”

Convera FX and macro strategist Antonio Ruggiero commented; “sterling is holding above $1.33 for now, but support looks fragile ahead of the Fed meeting and could slip if Jerome Powell, the Fed chair, sounds hawkish.”

Markets remain very confident that the Bank of England will cut interest rates at next week’s meeting, although a split vote is very likely.

In testimony to the Treasury Select committee, MPC member Mann maintained concerns over core inflation and it will be difficult to convince her to back a rate cut next week.

Federal Reserve policy will remain a key element for markets.

There are still very strong expectations that the Fed will cut interest rates by a further 25 basis points on Wednesday. There has been no unofficial push back from Fed officials and it will now be a major surprise if rates are not lowered.

Markets, however, are slightly less confident that rates will be cut again early in 2026.

The shift in expectations surrounding global rates has also triggered doubts whether the US central bank can continue to lower rates throughout 2026.

ING commented; “the reassessment of the Fed easing cycle proved the bigger story. There are now high expectations of a 'hawkish cut' at Wednesday evening's FOMC decision.

Markets will monitor comments from Chair Powell and also note the new interest rate forecasts from committee members.

ING added; “With market pricing of further Fed easing still vulnerable, we suspect the dollar's downside is limited into the Fed meeting.

As far as data is concerned, the NFIB small-business confidence index improved to 99.0 for November from 98.2 the previous month.

NFIB Chief Economist Bill Dunkelberg commented; “Although optimism increased, small business owners are still frustrated by the lack of qualified workers. Despite this, more firms still plan to create new jobs in the near future.”

The latest ADP weekly data indicated that private employers added a small number of jobs in the latest week.

The evidence suggests that there has not been further labour-market deterioration which will make it more difficult for the Fed to justify lower rates.

There will still be concerns over threats to Fed independence amid the appointment of a new Chair and potential changes to the board.

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TAGS: Pound Dollar Forecasts