Pound Sterling to Dollar Forecast: GBP Rebounds as Mixed US Data Halts USD Rally

Modified: Thursday, 25 June 2026 15:46 BST - Written by David Woodsmith

STORY LINK Pound Sterling to Dollar Forecast: GBP Rebounds as Mixed US Data Halts USD Rally

The Pound to Dollar (GBP/USD) exchange rate recovered above the 1.32 level on Thursday after a flurry of US economic data painted a mixed picture of the world's largest economy.

Revised figures showed first-quarter GDP growth was stronger than previously estimated, while weekly jobless claims fell to their lowest level in several weeks, reinforcing the resilience of the labour market.

However, consumer spending in the first quarter was revised sharply lower, highlighting signs that household demand weakened even as business investment remained robust.

At the time of writing, GBP/USD was trading at $1.3201, up 0.3% on the day as investors weighed evidence of a resilient US economy against softer underlying demand following last week's hawkish Federal Reserve policy decision.

GBP/USD Forecasts: Slides to 7-Month Lows

The Pound to Dollar (GBP/USD) exchange rate dipped to 7-month lows just below 1.3150 on Wednesday before stabilising in global markets.

According to UoB; “Looking ahead, the next level to watch below 1.3160 is 1.3110.”

Scotiabank sees the potential for sharper losses; “spot’s decline has cleared the prior 2026 low offering little in terms of near-term support ahead of 1.30.”

The dollar index hit 13-month highs on Wednesday amid weaker risk conditions and expectations of higher US interest rates.

Scotiabank added; “much of the GBP’s latest decline also appears to be driven by the adverse shift in yield spreads with movement largely driven by the shift in expectations for the Fed.”

Equity markets moved sharply lower in Asia with a sell-off in the AI sector which triggered defensive dollar demand amid weaker risk conditions.

ING commented; “Whether this is a moderate correction in a stellar year for AI stocks or the start of a more prolonged equity downturn, USD should outperform while risk aversion holds.”

It added; “US and Europe’s equity futures are stabilising this morning, suggesting consolidation may be more likely than another major leg higher in the dollar. But for now, we remain very cautious about picking a top in this USD move. We still don’t think this is the start of a new bullish USD cycle, but near-term momentum remains bullish.”

Yield trends will also remain an important element. Markets are now pricing in a 70% chance of a rate hike for September from just below 30% last week.

Danske Bank commented; “We expect the Fed to deliver two rate hikes in December 2026 and March 2027, respectively, which would bring the benchmark rate to 4.00-4.25%. We do, however, emphasise that there is a risk that rate hikes could come sooner, and that more than two could materialise.”

NAB’s Attril expressed some caution; "Obviously the momentum is on its side at the moment, but I think there is a lot priced. We'll have to see a correction in risk sentiment, one that's broader rather than just the tech sector, or the market further ratcheting up its expectations for hikes, before the dollar can go very much higher from here.”

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TAGS: Pound Dollar Forecasts