Pound Sterling to Dollar Forecast: Iran Uncertainty, Data Risks Dominate Outlook

Modified: Tuesday, 21 April 2026 11:01 BST - Written by Frank Davies

STORY LINK Pound Sterling to Dollar Forecast: Iran Uncertainty, Data Risks Dominate Outlook

The Pound to Dollar exchange rate (GBP/USD) has slipped back below 1.3500, after failing to hold gains near 1.36, as renewed Iran tensions triggered a fresh spike in oil prices and hit risk appetite.

With markets swinging between optimism and fear, GBP/USD is set for a highly volatile week, with geopolitical developments, UK data releases, and central bank signals all in focus.

GBP/USD Forecasts: Pound Dips as Fear Spikes Again

Hope and Fear have continued to trade blows in global markets. There was a strong boost to risk appetite on Friday following a statement from Iran that the Strait of Hormuz was open to all traffic.

In response, the Pound to Dollar (GBP/USD) exchange rate jumped to 2-month highs just below the 1.36 level as oil prices declined sharply.

GBP/USD, however, dipped to lows below 1.3500 on Monday as the Iran situation deteriorated again. In response, there was a fresh jump in crude oil prices and equity markets dipped again.

According to UoB; “The increase in downward momentum is not enough to indicate a continued decline. However, there is a chance for GBP to test 1.3450.”

Iran developments and UK data releases will be crucial elements this week with UK political developments also watched closely with Prime Minister Starmer under renewed pressure due to the Mandelson affair.

According to Danske Bank; “The market is likely to stay volatile this week as US and Iran will try to negotiate a deal.”

ING added; “In terms of the immediate focus, the question is whether investors will receive further positive news on renewed peace talks in Pakistan, or whether both sides will talk tough and potentially act tougher ahead of tomorrow's deadline on the two-week ceasefire.”

Danske Bank noted the importance of energy flows; “If oil does not start flowing through the strait soon, oil prices are likely to rise further and above USD100/bbl again, putting upward pressure on yields and downward pressure on EUR/USD.” This would be likely to hurt GBP/USD.

The evidence on US, global and UK economic trends will also be important this week.

There will be a greater focus on potential US interest rate trends with Fed Chair nominee Warsh due to testify in Congress.

ING commented; “He is expected to be dovish on rates, but hawkish on the size of the Fed's balance sheet.” Calls for lower rates would tend to hamper the dollar.

As far as UK data is concerned, the latest labour-market data will be released on Tuesday with the inflation data on Wednesday. The headline rate is forecast to increase to 3.3% from 3.0% with the core rate holding at 3.2%.

The latest PMI business confidence data is due on Thursday with expectations that there will be a small decline from March figures. A dip into contraction territory would be likely to hurt the Pound.

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