GBP/USD Price Forecast: Hawkish Fed Expectations Keep Pressure on GBP

Modified: Thursday, 25 June 2026 21:01 BST - Written by James Fuller

STORY LINK GBP/USD Price Forecast: Hawkish Fed Expectations Keep Pressure on GBP

The Pound to US Dollar (GBP/USD) exchange rate experienced some volatile trading on Thursday, with sharp swings in both directions as investors reacted to a fresh batch of US economic data.

At the time of writing, GBP/USD was trading at approximately $1.3181, little changed from the levels seen at the start of the session.

The US Dollar (USD) came under brief pressure early on Thursday before rebounding after the publication of stronger-than-expected US growth figures.

Updated data for the first quarter showed the US economy expanded at an annualised pace of 2.1%, revised up from an earlier estimate of 1.6%. The improvement reflected robust consumer demand alongside solid business investment.

Further support for the ‘Greenback’ came from inflation data, with the latest core PCE reading suggesting underlying price pressures remain elevated.

Taken together, the figures reinforced expectations that the Federal Reserve may need to maintain a restrictive policy stance, with markets increasingly pricing in the possibility of an interest rate increase before the end of the summer.

The Pound (GBP) traded without clear direction on Thursday as investors continued to assess the implications of the anticipated handover of power from Keir Starmer to Andy Burnham.

While financial markets have remained relatively calm so far, traders are still waiting for more detail on Burnham’s economic priorities and the team he intends to install once he takes office.

Particular focus remains on the Treasury, with speculation mounting that Chancellor Rachel Reeves could be replaced as part of a broader reshuffle of senior government positions.

Efforts by Burnham and his allies to reassure investors over their commitment to responsible fiscal management have helped ease concerns in the bond market. UK gilt yields have consequently slipped to their lowest levels since April, providing some support for Sterling, although lingering political uncertainty continues to cap upside potential.

Near-Term GBP/USD Forecast: Market Risk Appetite in the Spotlight

Looking ahead to Friday, with little in the way of major economic releases scheduled on either side of the Atlantic, broader market sentiment could play a leading role in driving the Pound to US Dollar (GBP/USD) exchange rate.

Should concerns surrounding technology shares and artificial intelligence-related valuations continue to weigh on stock markets, demand for safe-haven assets such as the US Dollar may remain elevated.

At the same time, Sterling could struggle to establish a clear trend as investors await greater clarity on the UK's evolving political landscape and future fiscal plans.

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TAGS: Pound Dollar Forecasts