GBP/USD Forecast: Softer US Growth Caps US Dollar Gains

Modified: Thursday, 28 May 2026 20:01 BST - Written by Tim Boyer

STORY LINK GBP/USD Forecast: Softer US Growth Caps US Dollar Gains

The Pound US Dollar (GBP/USD) exchange rate traded in a tight range on Thursday after recovering from an earlier dip during the European session.

At the time of writing, GBP/USD was trading at around $1.3424, broadly unchanged from the day’s opening levels.

The US Dollar (USD) struggled to hold onto its earlier gains on Thursday following the release of weaker revised growth figures from the United States.

According to the latest figures from the Bureau of Economic Analysis, US GDP growth for the first quarter was revised down from 2% to 1.6%, with softer consumer spending and lower business investment weighing on the final estimate.

The downward revision largely erased the ‘Greenback’s’ earlier advance, which had been driven by a more cautious market mood and renewed demand for safe-haven assets.

Investor nerves were rattled by escalating tensions in the Middle East after fresh exchanges between the US and Iran, while comments from US President Donald Trump regarding Oman and negotiations over the Strait of Hormuz added to geopolitical uncertainty.

The Pound (GBP) traded without clear direction on Thursday after a new report highlighted mounting problems within the UK labour market.

The government-backed review, led by former Health Secretary Alan Milburn, warned that more than one million young people are currently not in employment, education or training, raising fears over the long-term economic impact.

The report added to existing concerns surrounding the UK economy, particularly as signs of a broader labour market slowdown continue to emerge alongside growing pressure on public finances.

Near-Term GBP/USD Forecast: Bailey Speech to Drive Sterling?

Looking ahead to Friday’s session, aside from developments in the Middle East, the main focus for the Pound to US Dollar (GBP/USD) exchange rate is likely to be comments from Bank of England (BoE) Governor Andrew Bailey.

With markets still divided over whether the BoE could raise interest rates in June, investors will be watching Bailey closely for any clues regarding the central bank’s next policy move. Any hawkish signals may help to support Sterling.

Meanwhile, movement in the US Dollar is expected to remain closely tied to wider market sentiment, potentially allowing the safe-haven currency to strengthen if geopolitical tensions continue to escalate.

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