Pound to Dollar Weekly Forecast: Chancellor Appointment in Focus as GBP Recovers

Modified: Monday, 6 July 2026 07:31 BST - Written by James Fuller

STORY LINK Pound to Dollar Weekly Forecast: Chancellor Appointment in Focus as GBP Recovers

The Pound to Dollar exchange rate (GBP/USD) has recovered to two-week highs near 1.3380 as investors continued to unwind bearish Sterling positions following signs of a smoother UK political transition.

Attention is now shifting towards Andy Burnham's expected appointment of a new Chancellor, a decision widely seen as the next major test of market confidence in UK fiscal policy.

GBP/USD Forecasts: Waiting for the new Chancellor

Danske Bank forecasts that the Pound to Dollar (GBP/USD) exchange rate will slide to 1.26 on a 12-month view amid a vulnerable Pound and firm dollar.

Bank of America (BoA), however, expects a net gain to 1.37 by the end of this year as the Pound secures net support on capital inflows.

According to BoA; “Strong cross-border M&A inflows likely to support sentiment as political uncertainty recedes and focus turns to enhanced UK-EU relations and lower trade frictions.”

GBP/USD posted a net gain to a 2-week high around 1.3380 during the week with evidence that Pound benefitted from a covering of short positions.

Credit Agricole commented; “The GBP is still looking oversold, according to our FX positioning data and could continue to benefit from any potential short squeeze as well.”

Fiscal policy will be a key element, especially with strong expectations that Burnham will become the next Labour Party leader and be installed as Prime Minister.

ING commented; “ Andy Burnham will probably take over as Labour's leader and UK PM on 20 July. The focus will then be on whether he appoints Ed Miliband as Chancellor (probably a little sterling negative) and then what policies are planned to be enacted in Burnham's first budget – probably in early November.”

Scotiabank commented; “the “revolving door” at Number 10 over the past few years is a poor look for a large, developed economy and any tilt to the left in the ruling Labour party will register on GBP sentiment.”

Bank of England (BoE) policy will also be important with further doubts whether the central bank will hike rates.

According to ING; “the UK economy typically performs poorer in the second half of the year, and we suspect that Andrew Bailey's dovish half of the MPC would be looking to restart the BoE easing cycle at the first opportunity.”

Danske Bank expects no BoE rate hikes. In contrast, the bank forecasts that the Federal Reserve will hike rates in December and March.

Scotiabank maintains a cautious stance on the dollar; “ the prospect of lower energy prices is already weighing on inflation expectations and tighter policy in the early days of a reformist Fed chair look unlikely.

It added; “Broader dollar gains look stretched and markets are already quite long the USD but strength will persist while markets anticipate a tightening being the Fed’s next move. We think structural challenges (debt/deficits) remain medium-term constraints on dollar gains as well.”

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TAGS: Pound Dollar Forecasts