British Pound to Dollar Forecast: Energy Shock and Growth Risks Weigh on GBP

Modified: Monday, 30 March 2026 07:31 BST - Written by James Fuller

STORY LINK British Pound to Dollar Forecast: Energy Shock and Growth Risks Weigh on GBP

The Pound to Dollar exchange rate (GBP/USD) slipped below 1.3300 during the week as deteriorating risk sentiment and rising energy prices boosted demand for the US dollar.

Despite expectations of tighter Bank of England policy, analysts warn that the Pound faces a difficult balancing act as higher yields clash with slowing growth and volatile global conditions.

GBP/USD Forecasts: BoE dilemma

Bank of America sees the risk of near-term vulnerability, but is forecasting Pound to Dollar (GBP/USD) exchange rate gains to 1.43 by the end of 2026.

GBP/USD was hampered by weaker risk conditions during the week and dipped below the 1.3300 level as the dollar also made net gains.

Energy prices and risk conditions dominated during the week. Markets continue to expect a Bank of England (BoE) rate hike in April while the 10-year yield increased to an 18-year high above 5.00% before a retreat to near 4.90%.

SocGen commented; “Given the wild swings we are seeing in markets, it’s easier to imagine volatility and risk aversion, than to draw hard and fast conclusions about where we are going.”

As far as monetary policy is concerned, markets are pricing in over a 60% chance of a Bank of England rate hike at the April meeting and at least two hikes this year.

Nomura is not convinced that market expectations are realistic; “For the BoE, while we think there is a clear risk that further cuts are delayed or not even delivered, the market is pricing two full hikes over the next 12 months.”

ING also considers yield moves have been excessive and is backing no BoE rate hikes.

MUFG is not convinced the Pound will benefit from higher market rates; “yield differentials are unlikely to be a reliable driver of FX in times of turmoil and we continue to expect further dollar appreciation.”

The bank added; “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 with high-beta G10 underperforming as terms of trade and yield as a driver of FX fades.”

There is still likely to be volatility. According to MUFG; “The risk of this materialising is certainly rising but for now hope of a ceasefire remains the key anchor for financial market risk.”

Equity markets have still been relatively resilient, but Nomura sees significant risks for stocks and the Pound; “One potential shift would be if the markets starts to think more about the impact of the Middle East on global financial conditions and global demand.

It added; “This could result in a mindset shift towards a "risk-off" type framework, where the currencies most reliant on external capital flows and most exposed to global growth dynamics would suffer.”

Bank of America acknowledged near-term risks, but added; “We are most constructive GBP (post May local elections), but cautious near-term.”

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