Pound Sterling to Dollar Forecast: GBP Rebound Amid US Growth Fears

Published: Wednesday, 1 April 2026 09:30 BST - Written by Frank Davies

STORY LINK Pound Sterling to Dollar Forecast: GBP Rebound Amid US Growth Fears

The Pound to Dollar exchange rate (GBP/USD) rebounded slightly above 1.3200 after sliding to four-month lows near 1.3160, as markets weighed growing concerns over the US economic outlook.

While a recovery in risk appetite has provided some support to Sterling, ongoing energy market volatility and uncertainty over Federal Reserve policy continue to limit the scope for sustained gains.

GBP/USD Forecasts: Attempts to Rally from 4-Month Lows

According to UoB; “From here, there is a chance for GBP to drop to 1.3100. We will maintain the same view as long as 1.3285 remains intact.

Goldman Sachs has a 12-month GBP/USD forecast of 1.33.

Risk appetite came under pressure on Monday, but there was a rebound in equities on Tuesday which limited the scope for further dollar buying and also offered some protection for the Pound.

The Middle East situation remains a crucial element with some hopes that the US will look for a way to de-escalate the situation.

ING commented; “Trying to second-guess White House policy remains a hazardous occupation, but this Tuesday morning it seems investors are minded to look out for any signs of de-escalation.

It added; “With US light crude now trading above $100/bl – a sensitive level for the White House, apparently – the market will be on the lookout for any softer US rhetoric today.”

The economic impact of higher energy prices will also be a growing focus.

According to Rabobank; “the market is grappling with two major unknowns that feed directly into each other: when oil flows through the Strait will resume in meaningful volumes, and at what price level oil switches from an inflation story to a recession story.”

The UK 10-year gilt yield traded marginally lower at 4.85%, but upward pressure on mortgage rates will continue. The Federal Reserve and Bank of England responses will also be monitored very closely.

ING commented; “Fed Chair Jerome Powell yesterday sounded quite relaxed. Clearly, there was no fuel to the view of early Fed hikes here, and money markets switched back towards pricing a Fed cut by the end of the year.”

MUFG added; “Market participants have moved to price back in a higher likelihood of the Fed’s next policy move being a rate cut rather than a hike.”

US economic data will start to have a greater impact with a series of labour-market reports this week.

Danske Bank commented; “The sharp decline in labour supply growth leaves the US economy more vulnerable to downturns than in the past, and high-frequency data could be flagging warning signs of early negative sentiment effects.”

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TAGS: Pound Dollar Forecasts