GBP to USD Forecast: Pound Sterling Steadies as BoE Hints at Policy Turning Point

Modified: Wednesday, 14 January 2026 20:31 BST - Written by David Woodsmith

STORY LINK GBP to USD Forecast: Pound Sterling Steadies as BoE Hints at Policy Turning Point

The Pound to US Dollar exchange rate (GBP/USD) edged modestly higher on Wednesday, drawing support from remarks by a Bank of England policymaker that were interpreted as mildly hawkish.

At the time of writing, GBP/USD was trading near $1.3452, up around 0.2% from Wednesday’s opening levels.

The Pound (GBP) found some lift after comments from Bank of England Monetary Policy Committee member Alan Taylor prompted investors to reassess the outlook for UK interest rates.

Speaking at an event in Singapore, Taylor suggested inflation could return to the BoE’s 2% target by mid-2026, earlier than the central bank’s previous projections. While he maintained that interest rates are still likely to fall again, Taylor also indicated that borrowing costs are approaching a neutral level.

Given Taylor’s reputation as one of the more dovish voices on the MPC, his remarks were taken as a sign that the BoE’s easing cycle may be entering its later stages. This helped underpin Sterling through the session.

The US Dollar (USD), by contrast, struggled to find direction on Wednesday and traded unevenly against most of its major peers.

Sentiment toward the ‘Greenback’ remains fragile amid lingering concerns over the Federal Reserve, particularly following uncertainty surrounding an investigation involving Chair Jerome Powell. Although some of these worries have eased after senior lawmakers pushed back against the probe, investors remain cautious about the longer-term implications for the Fed’s independence.

USD traders were also reluctant to take strong positions ahead of key US data releases, including producer price inflation and retail sales figures. Softer input inflation would likely reinforce expectations of further Fed rate cuts, limiting upside for the Dollar.

GBP/USD Forecast: GDP and Jobs Data in the Spotlight

Looking ahead, attention turns to the UK’s latest GDP figures due on Thursday. Economists expect a modest 0.1% month-on-month expansion in November, though confidence in a rebound remains tentative.

Some analysts warn that uncertainty ahead of Chancellor Rachel Reeves’s autumn budget may have continued to weigh on activity, raising the risk of another underwhelming growth print that could cap Sterling’s gains.

For the US Dollar, the focus will be on US initial jobless claims. A forecast rise in new unemployment filings during the first full week of 2026 could place renewed pressure on USD if it adds to evidence that labour market momentum is cooling.

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TAGS: Pound Dollar Forecasts