Pound to Dollar Week Ahead Forecast: Peace Deal, Fed and BoE Decisions Set to Drive GBP

Modified: Monday, 15 June 2026 08:01 BST - Written by James Fuller

STORY LINK Pound to Dollar Week Ahead Forecast: Peace Deal, Fed and BoE Decisions Set to Drive GBP

The Pound to Dollar exchange rate (GBP/USD) has rebounded from support near 1.3300, but investors face a crucial week with both the Federal Reserve and Bank of England set to announce policy decisions. While improving risk appetite has helped Sterling recover ground, markets remain deeply divided over the outlook for interest rates on both sides of the Atlantic

GBP/USD Forecasts: Crucial central bank decisions

Scotiabank expects the Pound to Dollar (GBP/USD) exchange rate will secure a limited net advance to 1.37 by the end of this year with a further small gain to 1.39 at the end of next year.

Goldman Sachs does not expect gains above 1.35 even if the dollar loses ground.

GBP/USD again found support near 1.3300 during the week and rallied to around 1.34 as risk appetite improved and the dollar edged lower.

Politics will also be an important factor with the Makerfield by-election. There are strong expectations that Greater Manchester Mayor Burnham will challenge Prime Minister Starmer if he wins the by-election. Even if Burnham loses, there will be on-going uncertainty after the resignation of Defence Secretary Healey.

Interest rates will also be a key short-term influence with the Federal Reserve and Bank of England (BoE) policy decisions this week. This will be the first meeting for Fed Chair Warsh.

As far as the BoE is concerned, markets are not expecting a rate hike this week, although a split vote is likely, while the medium-term position remains unclear.

ING noted uncertainty; “If we’re right about energy prices, it’s going to become increasingly difficult for the Bank of England to avoid a rate hike this summer.”
It added; “That said, the case for moving in June has weakened. Natural gas prices have stayed remarkably benign – and that matters, because Britain remains one of the most gas-reliant economies in Europe.”
Speculation that inflation pressures will force a Federal Reserve rate hike has increased.

According to Goldman Sachs; "We are pushing the final two rate cuts in our Fed forecast back to June and December of 2027. The labor market has been stronger than we anticipated, and we now expect the unemployment rate to rise only a touch further to 4.4%, not enough to create a sense of urgency to lower rates.”

Scotiabank is not backing US rate hikes; “In the United States, we continue to expect the Fed to ease at the end of this year. This path remains somewhat more accommodative than what is prescribed by underlying economic conditions. The gap reflects our view that the Fed will increasingly focus on shoring up the tepid labour market and supporting growth, with continued political pressures and administrative changes.”

HSBC injected some caution over the dollar; “Yet, while the cyclical drivers favour the USD, some structural headwinds are coming back into view. In an interview with NBC, President Trump said that hiking rates is the wrong thing to do and we should actually lower interest rates.”

It added; “The topic of Fed independence may gain prominence once again.”

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TAGS: Pound Dollar Forecasts