Pound Sterling to Dollar Forecast: Key Support Under Threat Below 1.3350

Modified: Friday, 27 March 2026 08:31 BST - Written by Frank Davies

STORY LINK Pound Sterling to Dollar Forecast: Key Support Under Threat Below 1.3350

The Pound to Dollar exchange rate (GBP/USD) tested support near 1.3320 before recovering toward 1.3360, as markets continued to probe Sterling’s resilience amid volatile energy prices and geopolitical uncertainty.

While the Pound has held up relatively well, persistent risk aversion and headline-driven trading conditions are keeping pressure on key support levels below 1.3350.

GBP/USD Forecasts: Support Below 1.3350

Pound-Dollar drifted weaker to lows near 1.3320 on Thursday before a recovery to 1.3360 with the currency still demonstrating net resilience.

Risk appetite dipped again amid a renewed increase in energy prices and uncertainty surrounding Middle East developments with limited net gains for the dollar index to around 99.70.

According to Scotiabank; GBP/USD has extended back to test noted support at 1.3355/60 on the short-term chart. Losses through here risk extending to 1.3250/00.

UOB notes limited downward momentum and added; “To sustain the mild downward pressure, GBP must hold below 1.3410, with minor resistance at 1.3395.”

Bank of America sees near-term Pound risks, but is bullish on the longer-term outlook and is forecasting gains to 1.43 at the end of 2026.

There remains a high degree of uncertainty over the Iran situation with the US Administration reiterating that Iran is begging for a deal while Iran has denied talks are taking place.

Markets are having to gauge whether there is a realistic chance of a move towards a cease-fire or peace deal.

ING commented; “the FX market isn't ready to add another leg of de-escalation trade just yet. Some confirmation from Iran on the ongoing peace talks remains necessary to see DXY trade back below 99.0, in our view.

According to Westpac; "Markets remain decisively headline-driven, with a square focus on weighing up whether recent news marks a genuine de-escalation attempt, or a precursor to a new kinetic equilibrium."

MUFG notes the risk of market complacency; “A deterioration in growth expectations by investors remains modest based on the performance of equities but if/when that intensifies the broader risk-off will likely see the US dollar advance further initially.”

It added; “The risk of this materialising is certainly rising but for now hope of a ceasefire remains the key anchor for financial market risk.”

The outlook for interest rates will remain a key element. Traders are pricing in over a 60% chance of a Bank of England hike in April and expect at least two increases this year.

At this stage, markets are pricing in around a 35% chance of a Federal Reserve rate hike by the end of this year.

Danske Bank has amended its forecasts for rate cuts, but not backing a hike. According to the bank; “We delay our forecast of two more Fed cuts to September and December. While the Fed remains firmly in wait mode for now, the speculation of rate hikes seems overblown for us.”

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TAGS: Pound Dollar Forecasts