Pound Sterling to Dollar Prediction: GBP Struggles for Breakout Despite Inflation Rise

Modified: Thursday, 23 April 2026 08:31 BST - Written by David Woodsmith

STORY LINK Pound Sterling to Dollar Prediction: GBP Struggles for Breakout Despite Inflation Rise

The Pound to Dollar exchange rate (GBP/USD) is holding close to 1.3500, with no clear breakout as markets grapple with mixed geopolitical signals and fading expectations for Bank of England rate hikes.

Despite inflation rising to 3.3%, softer core data and uncertainty over energy prices have limited Sterling’s upside, while shifting Iran headlines continue to drive choppy dollar movements.

GBP/USD Forecasts: Holding Near 1.35

The Pound to Dollar (GBP/USD) exchange rate has continued to fluctuate around 1.3500 with no clear direction as markets struggle to secure a decisive trend even with multiple risk factors.

Iran headlines were mixed while the UK inflation data had little impact.

UoB sees some scope for gains; “the firmer underlying tone suggests GBP is likely to trade in a higher range of 1.3500 and 1.3570.” There is also tough resistance on approach to 1.36.

As far as geo-political trends are concerned, the dollar briefly strengthened in US trading on Tuesday after reports that there would be no US-Iran talks in Pakistan, but these gains were reversed after Trump stated that the current ceasefire would be extended.

According to Scotiabank; “The near-term balance of risk favors weakness for the USD as markets fade some of the geopolitically-driven sentiment-related strength that has offered support over the past six weeks or so.”Nevertheless, there is the persistent risk of choppy trading as markets react to headlines.

The UK reported an increase in headline inflation to 3.3% from 3.0% with the core rate edging lower to 3.1% from 3.2%.
J.P. Morgan global market analyst Zara Nokes commented; "There are clear upside risks to inflation, particularly if households – who have become accustomed to persistent price pressures for some time – demand higher wages to restore their eroded purchasing power.”
Markets, however, scaled back expectations of Bank of England tightening with no hike priced in until the July meeting. The overall narrative, however, could change quickly if there is no relief from higher energy prices.

In testimony to the Senate, Fed Chair nominee Warsh stated that he was concerned over excessive guidance. In this context, he is likely to stop producing the Committee interest rate forecasts and cut the number of speeches.

MUFG commented; “Our key conclusion is that over time investors need to get used to a less predictable Fed and at the same time the uncertainty related to a potential new framework for dealing with inflation. That mix coupled with the unpredictability coming from the White House does not suggest a positive backdrop for the dollar.”

Scotiabank added; “Structurally, the US’s trade and fiscal balances offer considerable pressure from a longer-term fundamental perspective as wider deficits — the ‘twin deficits’ — weigh on the USD.

It added; “Portfolio flows present an additional risk as global investors assess their concentration and overweighting to the US and USD-denominated assets.”

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