Pound Sterling to Dollar Forecast: GBP Falls as Oil Prices Surge

Modified: Wednesday, 29 April 2026 10:36 BST - Written by Tim Boyer

STORY LINK Pound Sterling to Dollar Forecast: GBP Falls as Oil Prices Surge

The Pound to Dollar exchange rate (GBP/USD) has slipped below 1.3500, retreating towards 1.3460 as rising oil prices and weaker risk appetite boosted demand for the US dollar.

Brent crude’s surge to three-week highs near $105 has unsettled markets, with ongoing Middle East uncertainty and upcoming Federal Reserve and Bank of England decisions likely to drive further volatility.

GBP/USD Forecasts: Dip Below 1.35

The Pound to Dollar (GBP/USD) exchange rate stalled below 1.3550 on Tuesday and retreated steadily to lows near 1.3460 as the dollar secured net gains amid a fresh dip in risk appetite.

Deutsche Bank sees scope for a GBP/USD recovery to 1.40 by the end of 2026.

Oil prices strengthened during the day with Brent advancing to 3-week highs near $105 p/b which damaged risk appetite.

ING commented; “Iran’s proposed interim ceasefire deal, which would reopen the Strait of Hormuz while postponing nuclear talks, has been met with little enthusiasm in Washington, according to the latest reports. That is pushing markets back into a higher-uncertainty regime, with oil prices staying well-supported.”

The bank notes that the dollar has only secured limited support and added; “US equities continue to show remarkable resilience, and corrections in RoW stock markets have also not been dramatic. That remains a key missing link for a sustained dollar rally.”

MUFG added; “With risk appetite resilient, the scope for US dollar appreciation is relatively modest. However, the longer the Strait of Hormuz remains closed the greater the risk of economic disruption and a turn in investor sentiment.”

A sustained retreat in equities would potentially trigger significant dollar gains.

The Federal Reserve will announce its interest rate decision on Wednesday with the Bank of England verdict due on Thursday.

No change in rates are expected, but guidance from the banks will be a key element.

Berenberg senior UK economist Andrew Wishart noted UK economic risks; "The two interest rate hikes priced in have already dampened economic activity, which reduces the likelihood that the BoE will follow through with actual rate hikes."

Looking at the Fed, MUFG commented; “Powell will find it difficult to continue to ignore the reality that upside inflation risks are rising given the conflict will this week be in its ninth week.”

The situation will, however, be complicated by the fact that this should be the last meeting as Chair for Powell, although it is uncertain whether he will remain on the committee.

In this context, Powell’s comments may have less impact than usual.

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TAGS: Pound Dollar Forecasts