Pound to Dollar Forecast: GBP Sub 1.33 on FED Powell Warning

Modified: Thursday, 19 March 2026 10:01 BST - Written by David Woodsmith

STORY LINK Pound to Dollar Forecast: GBP Sub 1.33 on FED Powell Warning

The Pound to Dollar exchange rate (GBP/USD) held below 1.33, trading near 1.3289 as markets reacted to Wednesday's key Federal Reserve meeting.

A modest retreat in oil prices has eased pressure on Sterling, but with central bank guidance and energy risks still in focus, traders remain wary of renewed dollar strength.

GBP/USD Forecasts: Held Below 1.34

The Pound to Dollar (GBP/USD) exchange rate maintained a firm tone on Tuesday and hit highs at 1.3375 in Asia on Wednesday before settling close to 1.3350.

The dollar has lost some ground in global markets as oil prices edged lower and overall risk conditions held steady ahead of key central bank rate calls.

GBP/USD will need to move above 1.34 to potentially break out of the downtrend seen from above 1.3850 in late January.

According to UoB; “The slight increase in momentum suggests GBP could edge higher to 1.3410. Based on the current momentum, a clear break above this level appears unlikely.

It added; “To sustain the mild momentum, GBP must hold above 1.3270.”

Although market conditions are calmer, there is still the risk of rapid and substantial moves.

Central bank developments will also be a key element over the next 36 hours. The Federal Reserve will announce its interest rate decision on Wednesday, with rates expected to be held at 3.75%, while the Bank of England will release its decision on Thursday.

The Fed committee members will also release their updated forecasts or “dot plots” of interest rates. At the December update, the median projection was for one cut during 2026.

ING commented; “The Fed will keep rates on hold, but the risks are clearly of a hawkish revision in the Dot Plot projections, with the median currently signalling one rate cut by year-end. The dollar should benefit from a revision to no cuts in 2026.”

MUFG took a different stance; “The obvious statement he will make is that the longer the conflict lasts the greater the upside risks to energy prices and hence inflation will be. We therefore do not expect the FOMC to alter the median dot profile which in December revealed a profile of one rate cut in 2026 and one in 2027.”

The statement and comments from Chair Powell will also be watched closely. ING did add; “In terms of dovish risks, reintroducing “downside risks” mentioned in the statement’s section about jobs could help markets maintain expectations for a cut on a dual-mandate rationale.”

Central banks will also be uneasy over inflation implications if energy prices remain elevated.

In this context, Danske Bank still sees scope for renewed dollar gains; “irrespective of one’s view on what global central banks should do to address the energy shock, markets are increasingly pricing in a scenario where central banks will tighten financial conditions relative to the pre-war scenario. All else being equal, a stronger USD plays a key role in tightening global financial conditions.”

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Pound Dollar Forecasts