Pound to Dollar End Week Forecast: GBP Reclaims 1.35

Modified: Thursday, 26 February 2026 16:31 BST - Written by James Fuller

STORY LINK Pound to Dollar End Week Forecast: GBP Reclaims 1.35

The Pound to Dollar exchange rate (GBP/USD) has regained ground above the 1.3500 level after a bout of two-way volatility, as both Sterling and the US dollar respond to shifting interest rate expectations and lingering geopolitical uncertainty.

While resilient US economic data has underpinned the greenback, Bank of England Governor Bailey’s refusal to pre-commit to a March rate cut has helped the Pound stabilise, leaving GBP/USD locked in a tug-of-war between policy divergence and trade-related risks.

GBP/USD Forecasts: Back Above 1.35

The Pound to Dollar (GBP/USD) exchange rate found support below the 1.3500 level on Tuesday and traded just above this level on Wednesday.

The Pound secured a net advance following comments from Bank of England officials while the dollar was broadly resilient with little scope to extend short positions without a fresh catalyst.

Bank of America noted the latest survey evidence which suggests that funds are holding the lowest dollar positions for 10 years. According to the bank; “ The signal matters, especially given the confluence of near-term upside risks for USD from Iran risks, resilient US data and technical factors.

It added; “But we do not expect positioning to drive an extended USDrally vs. the major currencies.”

ING commented; “Yesterday, US data was supportive for the dollar, with consumer confidence rising to 91 in the February print, while last month’s drop was downsized in the revision.”

There were no major market-moving developments within President Trump’s State of the Union speech, although markets remain wary over the possibility of a US military attack on Iran.

MUFG commented; “There was nothing in the way of notable policy announcements although he did warn Iran confirming that he will never allow Iran to obtain a nuclear weapon and that he believed Iran had resumed its “sinister” pursuit of nuclear weapons.”

There is still a high degree of uncertainty over US tariffs following last week’s Supreme Court ruling.

Goldman Sachs commented; “We have contended that policy uncertainty is a particularly important channel for the Dollar as it can negatively influence investor and business activity.”

The Pound drew some support from Bank of England Bailey’s testimony to the Treasury Select Committee. Bailey declined to back formally a rate cut at the March meeting and stated that it was a genuinely open question.

There were still concerns over underlying inflation trends. According to Bailey; “In the latest inflation food prices were off a bit more than we expected, but services prices didn't come off as much as we thought they would.

MUFG noted; “Front-end yields nudged a little higher yesterday, by a couple of basis points, with the probability of a rate cut declining modestly, which helped the performance of the pound.”

The US consumer confidence index strengthened to 91.2 for February compared with consensus forecasts of around 87.5 while the January figure was revised to 89.0 from the flash reading of 84.5.

Conference Board Chief Economist Dana M Peterson commented; "Confidence ticked up in February after falling in January, as consumers' pessimistic expectations for the future eased somewhat.”

She added; “Four of five components of the Index firmed. Nonetheless, the measure remained well below the four-year peak achieved in November 2024.”

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TAGS: Pound Dollar Forecasts