Pound-to-Dollar Forecast: Strong USD Caps GBP Rebound

Modified: Wednesday, 20 May 2026 15:46 BST - Written by Minesh Chaudhari

STORY LINK Pound-to-Dollar Forecast: Strong USD Caps GBP Rebound

The Pound to Dollar exchange rate (GBP/USD) rebounded strongly from support near 1.3300, but struggled to sustain gains above 1.3450 as firm US yields and renewed dollar demand offset easing UK political concerns.

Sterling remained relatively resilient despite another weak UK labour market report, although traders continue to monitor geopolitical tensions, Federal Reserve expectations and the outlook for the Bank of England closely.

GBP/USD Forecasts: Trades Below 1.34

After finding support near 1.3300 on Monday, the Pound to Dollar (GBP/USD) exchange rate surged to highs near 1.3450 before settling close to 1.3400.

The Pound was broadly resilient in global markets despite weaker than expected UK jobs data.

Scotiabank commented; “Fundamentally, GBP rate support is eroding in response to the latest softening in UK rate expectations, while sentiment is providing an important offset as the political situation offers support and a softening in the premium for protection against GBP weakness.”

According to UoB; “The rapid rise appears excessive, and instead of continuing to rebound, GBP is more likely to trade in a range between 1.3380 and 1.3460.”

Scotiabank added; “ Support has been clearly observed in the low 1.33s.”

Markets were continuing to monitor ge-political developments with President Trump stating that he had held back from another series of strikes on Iran. The dollar held a firm tone with the currency index around 99.25.

ING commented; “press reports continue to highlight a wide gap between the US and Iran on peace and nuclear terms. If tangible progress fails to materialise in the coming days, DXY could push through 99.50 even without a renewed military escalation.

UK jobs data was weaker than expected with the unemployment rate increasing to 5.0% in the three months to March from 4.9% previously while there was a provisional 100,000 slump in payrolls for April. There is, however, scope for substantial revisions once the final data is released.

Despite the weaker than expected data, markets also continued to price in a June Bank of England rate hike.

US yields also remained elevated which underpinned the dollar in global markets as markets fretted over US inflation trends.

Kevin Warsh is due to be sworn in as Fed Chair On Friday with his comments watched very closely. Hawkish comments on interest rates would potentially trigger further dollar buying.

According to Thierry Wizman, Macquarie Group’s global foreign exchange and rates strategist, "Even if the Fed moves to signal that it will adopt a neutral bias in June, it may not be enough to stabilize inflation expectations and long-term U.S. Treasury yields."

He added; "An opportunity to change the Fed's rhetoric decidedly toward 'hawkish' will come with the small flurry of Fed speeches, between now and June 6.”

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TAGS: Pound Dollar Forecasts