Pound Sterling to Dollar Forecast: USD Rally Pauses, GBP Remains Under Pressure

Modified: Saturday, 27 June 2026 15:31 BST - Written by David Woodsmith

STORY LINK Pound Sterling to Dollar Forecast: USD Rally Pauses, GBP Remains Under Pressure

The Pound to Dollar exchange rate (GBP/USD) attempted to stabilise after falling to seven-month lows below 1.3150, as the recent surge in the US Dollar paused.

While Sterling found some support as Treasury yields eased and oil prices extended their decline, investors continue to favour the Dollar amid expectations of stronger US economic growth, resilient capital inflows and the prospect of higher Federal Reserve interest rates.

GBP/USD Forecasts: Recovery from 7-Month Lows

The Pound to Dollar (GBP/USD) exchange rate dipped to fresh 7-month lows below 1.3150 on Wednesday before a tentative rally to 1.3190 on Thursday.

The dollar has gained further underlying support from reservations over volatility in the tech sector and expectations of underlying capital inflows into US assets. Gold has remained under pressure

US short-term yields, however, have fallen amid further losses in oil prices and this will tend to limit the scope for further dollar gains, especially if equities make headway.

GBP/USD still needs to make further headway to ease downward pressure. UoB commented; “a breach of 1.3200 would indicate that GBP is more likely to range-trade rather than testing 1.3135.” Key support remains around 1.30.

Domestically, markets were looking for further hints on who Burnham would choose as Chancellor if he succeeds Starmer as Prime Minister.

Current Chancellor Reeves has backed Burnham as leader, but the chatter continues to suggest strongly that she will be replaced with markets watching UK bond markets.

ING commented on the US currency; “The dollar seems to have halted its run on some risk sentiment stabilisation, but it’s still early to rule out another leg higher in the greenback. Any new signs of AI jitters could be the catalyst for more safe-haven-related dollar demand.

The bank added; “At the same time, our baseline view remains that we are not far from the peak in this dollar rally.”

According to MUFG; “If the Fed is serious about restoring price stability, a significant tightening of monetary policy will be required so it makes sense that more hikes have been priced in recently encouraging a stronger US dollar.”

It added; “We expect the US dollar to continue to trade at stronger levels until it is either challenged by incoming economic data showing slowing inflation and/or any indications from the Fed that they will not follow through with rate hikes.”

Standard Chartered head of global G10 currency research Steve Englander sees the potential for dollar demand; "We believe the move in rates and the dollar reflects expectations of cyclical and structural U.S. economic outperformance."

He added; "Strong productivity growth, partly AI-driven, should support higher earnings and lead to dollar-positive capital inflows."

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TAGS: Pound Dollar Forecasts