Pound-to-Dollar Forecast: GBP Survives 1.33 Test as US Inflation Misses Expectations

Modified: Wednesday, 10 June 2026 17:36 BST - Written by David Woodsmith

STORY LINK Pound-to-Dollar Forecast: GBP Survives 1.33 Test as US Inflation Misses Expectations

The Pound to Dollar exchange rate (GBP/USD) has bounced from support near 1.3300, helped by a softer-than-expected US core inflation reading which eased immediate concerns that rising energy costs are feeding into broader price pressures. While the dollar surrendered some recent gains, markets remain cautious ahead of next week's Federal Reserve meeting, leaving Sterling vulnerable if expectations for higher US interest rates revive.

GBP/USD Forecasts: Survive test of 1.33

The Pound to Dollar (GBP/USD) exchange rate found support just above 1.3300 on Monday and has rallied to near 1.3390.

Risk appetite secured a very tentative improvement while the dollar failed to hold its best levels as oil prices moved lower. The pendulum switched back towards hopes that some form of deal could be secured between the US and Iran.

According to UoB there is still the risk of renewed selling; “The likelihood of GBP breaking clearly below 1.3300 will remain intact as long as GBP holds below 1.3410.”

Scotiabank noted the importance of 1.33; “Further losses from here would shift our focus to the late March low in the mid-1.31s. For now, we look to a near-term range bound between 1.3300 and 1.3400.”

The US labour market and inflation pressures will continue to be a key short-term focus.

The NFIB small business confidence index retreated to 95.3 for May from 95.9 previously and below expectations of 96.0. There was further upward pressure on costs while the number of companies reporting labour costs as the most important problem increased to a record high.

ING commented; “Last week was all about the strength of the US labour market and this week the market will be focused on US price data. This starts with tomorrow's May CPI and is followed by PPI on Thursday. The market looks positioned for some firm data here and a far less dovish FOMC meeting in a week's time.”

The latest US inflation data is due on Wednesday with consensus forecasts that the headline rate will increase to 4.2% from 3.8%. Core prices are expected to increase 0.3% on the month with the year-on-year rate edging higher to 2.9% from 2.8%.

According to MUFG; “While the pick-up in inflation is well anticipated in the coming months, it could add to investor unease over the Fed’s willingness to continue looking through higher inflation by leaving rates on hold.”

There should be no comments on monetary policy with the blackout period in effect until next week’s meeting.

MUFG noted; “The next FOMC meeting on 17th June is likely to be an important pivot point for Fed policy expectations and the US dollar as it will be the first time that new Fed Chair Kevin Warsh will outline his thoughts on how the Fed should respond to the energy price shock.”

It added; “Last week’s stronger nonfarm employment report has made it more likely that the Fed will at least drop their easing bias at the June FOMC meeting.”

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TAGS: Pound Dollar Forecasts