Pound Sterling Rises Against Dollar (and Euro) on UK GDP Beat

Modified: Thursday, 15 January 2026 09:19 BST - Written by Frank Davies

STORY LINK Pound Sterling Rises Against Dollar (and Euro) on UK GDP Beat

The Pound to Dollar exchange rate (GBP/USD) traded close to 1.3450 after UK GDP data surprised on the upside.

Official figures showed the UK economy grew faster than expected in November, easing immediate recession fears and helping the Pound hold firm above the 1.3400 support area despite ongoing geopolitical and Federal Reserve-related uncertainties.

GBP/USD Forecasts: Trades Near 1.3450

The Pound to Dollar (GBP/USD) exchange rate has been held in tight ranges and is trading close to 1.3450 after finding support above the 1.3400 level.

Geo-political developments continue to dominate with markets waiting for the next moves in Iran.

According to UoB; “a breach of 1.3470 would indicate that the current downward pressure has eased.”

From a longer-term view, Rabobank does not expect the Pound will be able to secure any momentum and has a 12-month GBP/USD forecast of 1.33.

The US Producer prices and retail sales data did not have a significant impact with markets pricing in less than a 30% chance of a cut in March after no change in January.

The issue of Federal Reserve independence remains a key issue for markets given President Trump’s continued attacks on the central bank and Chair Powell’s policies.

There has been no announcement on the next Fed Chair.

ING commented; “the perceived risk to the Fed’s independence is continuing to fade – helped by a sense that the criminal investigation into Chair Powell may not progress much further, and by pushback from some GOP lawmakers.”

It added; “We still see a reasonable chance the dollar ultimately emerges stronger from this episode, as Powell could be viewed as more resolutely hawkish in an effort to reinforce Fed independence.”

Brian Martin, head of G3 Economics at ANZ notes the important risks if Fed independence is compromised. "It risks having adverse consequences of higher inflation, higher funding costs for the government and more volatility in economic activity."

He noted strong opposition to the recent attacks on Chair Powell. Martin added; "Markets are erring on the side of caution: They're not jumping to conclusions, and I think that sense will prevail and that the independence of the Fed will be protected.”

MUFG notes that President Trump could be in a position to nominate three committee members this year.

In this context, the bank still sees significant risks to the Fed; “This is a ‘slow-burn’ negative for the US dollar that isn’t going away. It will surely be an incentive for global reserve managers to continue reducing their holdings of US dollars in reserves.”

As far as the UK is concerned, the latest GDP data is due for release on Thursday. Consensus forecasts are for 0.1% growth for November after a 0.1% decline for October.

The data will have a significant impact on market sentiment towards the economy and Pound.

Rabobank Senior FX Strategist Jane Foley commented; “Weaker than expected data tomorrow would enhance BoE rate hike risks for the current quarter and increase downside risk for GBP, it would also further undermine the UK government’s growth agenda.”

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TAGS: Pound Dollar Forecasts