British Pound to Dollar Forecast: GBP Jumps to 11-Week Best on USD Retreat

Modified: Wednesday, 24 December 2025 10:46 BST - Written by Frank Davies

STORY LINK British Pound to Dollar Forecast: GBP Jumps to 11-Week Best on USD Retreat

The Pound to Dollar exchange rate (GBP/USD) climbed above 1.3500, reaching 11-week highs, as broad dollar weakness continued to dominate global markets. The move reflects USD vulnerability rather than renewed Sterling strength, with thin liquidity amplifying gains. Attention now turns to whether resistance near 1.3580 caps the advance into year-end.

GBP/USD Forecasts: 11-Week Highs

The dollar has continued to lose ground in global markets while the Pound has held broadly unchanged on the main crosses.

US equity markets posted gains on Monday while precious metals have remained a key talking point with gold and silver jumping to fresh record highs overnight.

The Pound to Dollar (GBP/USD) exchange rate has taken advantage of dollar vulnerability and hit 11-week highs above 1.3520 before trading just above 1.3500.

Scotiabank commented on the technical outlook; “The pound found firm support on dips through the 200-day MA (1.3356) last week and enjoys the backing of bullish trend oscillators. A clear push through 1.3450/55 targets 1.3525/50.”

There is another key area of potential resistance in the 1.3580 area with major multi-year barriers above 1.3700.

Liquidity will be very low over the next 26 hours, maintaining the potential for erratic currency moves and there is potential for sharp moves into the year-end period.

The dollar is set to register the largest losses since 2027 and MUFG looked at potential contrasts with that year.

According to the bank; “That 2017 drop was more of a one-off given the Fed was actually tightening policy and the US economy (labour market for sure) was more robust than today. Hence, the drop for the dollar this year is unlikely to be a one-off with scope for further gains ahead. We essentially believe the US dollar has peaked and we are now in a multi-year downtrend for the dollar.”

UoB looked at the economic outlook for interest rates; “we maintain our call for a pause in early 2026 followed by two rate reductions in 2Q and 3Q 2026, with weakness in the labour market to manifest itself ahead, amidst delayed key US economic data.”

MUFG also looked at other issues surrounding the Federal Reserve which could damage the US currency.

According to the bank; “If the Supreme Court rules in favour of Trump being able to fire Lisa Cook these perceptions will only be further reinforced. Fed independence being threatened will certainly be a theme in focus in 2026.”

The issue of the next Fed chair will also be a key factor for markets. Markets still consider that National Economic Council head Hassett is the favourite to be nominated, although Waller and Warsh are also still potential candidates.

The Administration will expect the next Chair to cut interest rates, but divisions within the committee are liable to intensify.

Danske Bank commented; "Other officials might be sceptical of forward-looking arguments that rely heavily on the administration's policies bringing inflation closer to target.”

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TAGS: Pound Dollar Forecasts