Pound to Dollar Forecast: GBP/USD Fails to Hold 1.34 Amid Oil Volatility

Modified: Thursday, 26 March 2026 14:31 BST - Written by Tim Boyer

STORY LINK Pound to Dollar Forecast: GBP/USD Fails to Hold 1.34 Amid Oil Volatility

The Pound to Dollar exchange rate (GBP/USD) struggled to hold gains above 1.34, retreating toward 1.3350 as mixed geopolitical signals and volatile energy prices kept markets on edge.

Despite some underlying support from UK data and rate expectations, persistent uncertainty surrounding the Middle East conflict continues to underpin the dollar and limit Sterling’s upside.

GBP/USD Forecasts: Unable to Hold 1.34

The Pound to Dollar (GBP/USD) exchange rate hit highs around 1.3425 on Wednesday, but failed to hold the gains and dipped to lows near 1.3350 later in the US session.

Scotiabank considers that range trading may continue in the short term, but added; “Broader trends are looking a little more compelling from a bullish-GBP perspective but a clear extension through the upper 1.34 area is needed to bolster the bull case at this point. Support is 1.3355/60 on the short-term chart.”

UoB points to notable resistance around the 1.3480 area. Barclays has a year-end GBP/USD forecast of 1.36.

Middle East developments continued to dominate during the day as oil prices rallied from intra-day lows amid rumours that the US would look to seize one of the Iranian islands in the Strait of Hormuz.

Reports that the U.S. sent a 15-point plan for discussion to Tehran was also offset by further attacks by Israel and Iran.

ING commented; “We are not geopolitical experts, but we would have thought Iran would have maximum leverage of high energy prices going into any negotiation. Thus, it is probably too early to expect any big drop in energy prices or a much softer dollar this week.”

Scotiabank added; "If we were looking at a real off ramp being found here, then we would see some of this premium in the dollar start to correct.”

Earlier, the UK reported an unchanged headline inflation rate at 3.0% for February while the core rate edged higher to 3.2% from 3.1%.

Inflation will inevitably increase next month as the Iran impact starts to have a significant impact.

In comments on Wednesday, Bank of England (BoE) member Greene stated that she was more worried over the Iran war impact on higher inflation rather than slower demand.

Markets are pricing in over a 60% chance of a rate hike at the April meeting, but there is still a high degree of uncertainty.

Berenberg senior UK economist Andrew Wishart commented; “How the BoE reacts will depend on whether the upward pressure on inflation from the rise in energy prices puts upward pressure on prices beyond energy itself and food and manufactured goods, where it is a key input.

He added; “We doubt that it will. Sluggish economic growth and a growing margin of slack in the labour market suggest that firms’ pricing power and workers’ bargaining power are insufficient for a new price-wage spiral to begin.”

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TAGS: Pound Dollar Forecasts