GBP/USD Forecast: US Dollar Slips as Markets Price Softer Fed Stance

Modified: Monday, 27 April 2026 20:56 BST - Written by Ben Hughes

STORY LINK GBP/USD Forecast: US Dollar Slips as Markets Price Softer Fed Stance

The Pound US Dollar (GBP/USD) exchange rate pushed higher on Monday, climbing to its strongest level in ten days as improving risk appetite and dovish Federal Reserve expectations supported the pairing.

At the time of writing, GBP/USD was trading at $1.3559, marking a modest gain of approximately 0.2% on the day.

The US Dollar (USD) edged lower on Monday, pressured by growing expectations that the Federal Reserve may adopt a more accommodative stance in the coming months.

Over the weekend, Senator Thom Tillis confirmed he would no longer oppose the nomination of Kevin Warsh as the next Chair of the US central bank, following the Department of Justice’s decision to drop its investigation into current Fed Chair Jerome Powell.

This development clears the path for Warsh to succeed Powell when his term concludes in mid-May.

As Warsh is widely viewed as leaning more dovish than Powell, the reduced resistance to his appointment undermined confidence in the US Dollar.

The increasingly risk-sensitive Pound (GBP) advanced against the safe-haven US Dollar on Monday, supported by a more optimistic market backdrop.

Investor sentiment improved following reports that Iran had approached the US with a proposal to reopen the Strait of Hormuz, easing some geopolitical concerns.

This uplift in risk appetite helped lift Sterling against USD, even as the Confederation of British Industry’s (CBI) latest distributive trades survey painted a bleak picture for the UK retail sector, with sales volumes dropping to their lowest level since records began in 1983.

Short-Term GBP/USD Forecast: Central Banks in Focus

Looking ahead, shifts in market sentiment are likely to play a central role in driving GBP/USD, with developments in the Middle East continuing to influence risk appetite.

Any indications of progress towards a ceasefire could pressure the US Dollar, while an escalation in tensions may bolster demand for the safe-haven currency.

That said, movement in the pairing could remain restrained as investors await this week’s key policy announcements from the Federal Reserve and the Bank of England (BoE), due on Wednesday and Thursday respectively.

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TAGS: Pound Dollar Forecasts