Pound Sterling to Dollar Forecast: 1.3220 Support Under Pressure

Modified: Tuesday, 17 March 2026 11:16 BST - Written by David Woodsmith

STORY LINK Pound Sterling to Dollar Forecast: 1.3220 Support Under Pressure

The Pound to Dollar exchange rate (GBP/USD) attempted a modest recovery after sliding to 14-week lows near 1.3220, but gains remained limited as elevated oil prices and geopolitical tensions continued to support the US dollar.

With energy markets still under strain and central bank decisions looming, Sterling remains vulnerable to further downside unless risk appetite improves and oil prices retreat.

GBP/USD Forecasts: Recovery Attempt

The Pound-to-Dollar rate posted sharp losses to 14-week lows around 1.3220 on Friday as the dollar posted sharp gains across the board amid a fresh slide in risk appetite.

GBP/USD managed a slight rebound to 1.3250 on Monday amid hopes that there would be moves to restore shipping through the Straits of Hormuz.

The recovery was notably limited with Brent crude trading above the $100 p/b level while the UK 10-year yield remains close to 6-month highs.

According to UoB; some short-term respite is realistic; “While further GBP weakness seems likely, given the deeply oversold conditions, any decline is unlikely to reach the major support at 1.3180. Last Friday’s 1.3220 low is expected to offer some support as well.”

OIl and gas prices will remain a key short-term element.

MUFG commented on the outlook; “It remains highly uncertain how and when the Strait will reopen. Unless supply comes back on stream soon, a higher price of oil will be required to destroy global demand to bring it back into balance with supply thereby reinforcing the negative energy price shock for the global economy.”

It added; “We expect the US dollar to remain bid until the blockage in the Strait of Hormuz starts to ease.”

The Federal Reserve and Bank of England will both announce their policy decisions this week with no change in rates expected while rhetoric will be watched closely.

ING commented; “Regarding this week's FOMC meeting, we think the event risk is dollar positive. At the January FOMC meeting, the takeaway was that the Federal Reserve wanted to see clear signs of lower inflation before delivering further rate cuts. Events in the Middle East warn that US inflation will be heading to 3.5% and not 2.0% this summer.”

Danske Bank added; “We do not expect this week's FOMC meeting to be a game changer, as monetary policy will be held unchanged and as Powell is unlikely to deliver firm forward guidance under such heightened uncertainty. But any signs of policymakers considering tightening financial conditions to combat rising inflation expectations would provide additional support for broad USD.”

HSBC considers that underlying dollar fundamentals are fragile; "Unlike 2022, the key pillars that previously underpinned a structurally stronger USD — namely a clearly hawkish Federal Reserve (Fed) and weakening global growth — are not evident.”

It added; "Together, these factors can support more cyclical currencies and temper broad-based USD strength, reinforcing our central view that a de-escalation in tensions would allow the USD to resume softening.

It did, however, note; “That said, risks remain skewed to the upside for the USD, if the conflict drives a sharp repricing of the Fed path into hiking territory."

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TAGS: Pound Dollar Forecasts