Pound Sterling Forecast: Makerfield By-Election and BoE Decision in Focus

Modified: Tuesday, 16 June 2026 21:31 BST - Written by Frank Davies

STORY LINK Pound Sterling Forecast: Makerfield By-Election and BoE Decision in Focus

The Pound US Dollar (GBP/USD) exchange rate struggled for direction on Tuesday as investors sought greater clarity regarding the recently announced US-Iran peace framework.

At the time of writing, GBP/USD was trading at around $1.3412, little changed from the start of the session.

The US Dollar (USD) traded steadily through Tuesday's European session after recovering some ground lost following news of a preliminary peace agreement between Washington and Tehran.

While the announcement initially encouraged a broad risk-on rally, enthusiasm faded as markets were left disappointed by the lack of details.

Investors remain focused on several unresolved issues, including the pace of sanctions relief, the future of Iran's nuclear activities and the timetable for restoring normal shipping operations through the Strait of Hormuz.

The US Dollar also benefited from caution ahead of the Federal Reserve's latest policy announcement, with traders positioning for a potential hawkish tilt from the bank.

The Pound (GBP) remained largely rangebound on Wednesday as traders looked ahead to two potentially significant domestic events later in the week.

Political attention remains firmly focused on Thursday’s Makerfield by-election, with markets closely watching whether Andy Burnham can secure a return to Parliament. Such an outcome would likely intensify speculation over the future of Prime Minister Keir Starmer's leadership and could inject fresh volatility into UK assets.

At the same time, investors are awaiting the Bank of England (BoE) interest rate decision. While no immediate policy changes are expected, any clues regarding the bank’s outlook for inflation and future rate moves could influence Sterling sentiment.

Near-Term GBP/USD Forecast: Central Bank Decisions Take Centre Stage

Looking ahead, Wednesday's Federal Reserve meeting is likely to be the primary catalyst for movement in the Pound to US Dollar exchange rate.

Although interest rates are expected to remain unchanged, investors will be paying close attention to comments from new Fed Chair Kevin Warsh for clues on how policymakers view inflation risks and the outlook for monetary policy.

Any indication that the Fed remains open to raising rates later this year could provide fresh support for the US Dollar.

Meanwhile, Sterling may draw support from the UK's latest inflation release. If consumer price growth accelerated in May, markets may increase their expectations for a future Bank of England rate rise, helping to underpin the Pound.

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TAGS: Pound Dollar Forecasts