Pound-to-Dollar Forecast: Can GBP/USD Break Out of the 1.33 Range?

Modified: Monday, 15 December 2025 08:01 BST - Written by Ben Hughes

STORY LINK Pound-to-Dollar Forecast: Can GBP/USD Break Out of the 1.33 Range?

The Pound to Dollar exchange rate (GBP/USD) retreated from seven-week highs above 1.34 after weak UK GDP data reinforced expectations of a December BoE rate cut.

The setback has shifted focus firmly to next week’s policy decision and the likely vote split.

Near-term GBP outlook now hinges on BoE guidance versus continued dollar softness after the Fed’s latest cut.

GBP/USD Forecasts: BoE up next

SocGen expects GBP/USD will slide to 1.27 by the end of 2026 with fragile UK fundamentals and a dollar comeback.

MUFG has lowered its forecasts slightly, but expects GBP/USD gains to 1.38 by the end of next year as the dollar comes under pressure.

GBP/USD jumped to 7-week highs above 1.34 during the week as the dollar came under pressure following the latest Federal Reserve interest rate cut before dipping back below this level after weak UK GDP data and a slide in equities.

The data reinforced strong expectations of a December Bank of England (BoE) rate cut.

Ruth Gregory, deputy chief UK economist at Capital Economics, commented; “The surprise 0.1% m/m contraction in the economy in October is a further reason to expect the Bank of England to cut interest rates next Thursday.”

MUFG commented on the Bank of England outlook and sees near-term Pound vulnerability; “A rate cut is nearly fully priced in December although three cuts in total over the next 12mths is not fully priced and there is scope for front-end yields to decline further.”

MUFG, however, expects greater medium-term problems for the US currency; “We still expect the dollar to weaken though and there are a number of events on the horizon that we think will serve to undermine the dollar.”

The bank expects further US labour-market weakness and notes the possibility that the Supreme Court will rule against the reciprocal tariffs.

Fed policy will be a key element with a new Chair due to be announced soon and underlying political pressure for lower rates.

MUFG commented; “Kevin Hassett is the favourite and if confirmed would reinforce expectations of a more aggressive approach by the Trump administration to make fundamental change at the Fed and increase pressure on the FOMC for lower rates.”

HSBC expects dollar vulnerability; “Historically, the USD tends to weaken when the Fed cuts rates outside of recessionary periods. Besides, market expectations for further rate cuts in 2026 may increase with a new Fed Chair. Concerns over Fed independence could further contribute to USD weakness.”

SocGen, however, expects a dollar recovery will undermine the Pound; “The implication for GBP/USD is that there is only so long that GBP/USD is likely to hold above 1.30. However, only so long might mean most, if not all, of 2026. More importantly, perhaps the circumstances whereby GBP/USD gets back above 1.40 are very hard to imagine.”

Mizuho expects relatively narrow ranges with a weaker dollar offset by a dovish BoE; “We expect GBP/USD holds around 1.31 to 1.33 through 2025–26.”

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Pound Dollar Forecasts