Pound Sterling Forecast: UK GDP, US Retail Sales in Focus for GBP/USD

Modified: Wednesday, 15 July 2026 20:31 BST - Written by David Woodsmith

STORY LINK Pound Sterling Forecast: UK GDP, US Retail Sales in Focus for GBP/USD

The Pound to US Dollar (GBP/USD) exchange rate continued to edge higher on Wednesday, building on the previous session's rally as investors further pared back expectations for additional Federal Reserve policy tightening.

At the time of writing, GBP/USD was trading at around $1.3401, unchanged from Wednesday's opening levels.

The US Dollar (USD) remained muted through Wednesday's European session as markets continued to digest the implications of the latest US inflation figures.

The weaker-than-expected consumer price index released on Tuesday sparked a broad selloff in the 'Greenback', with investors increasingly questioning whether the Federal Reserve will have scope to raise interest rates again in the coming months.

Following the inflation release, the implied probability of a 25-basis-point rate increase later this month dropped sharply, falling from above 40% to just 14%.

The US Dollar also faced additional headwinds ahead of the latest producer price index release, with economists expecting factory gate inflation to cool further and reinforce the case for a more cautious approach from the Fed.

Although consolidating its recent gains against the US Dollar, the Pound (GBP) traded with little conviction against most of its other major counterparts on Wednesday.

With no significant UK economic releases to provide direction, investors instead focused on the steady rise in UK government bond yields, with the benchmark 10-year gilt climbing towards its highest level in almost two months.

Higher borrowing costs continue to cloud the UK's fiscal outlook, with markets wary of the challenges they could create for the incoming government led by Andy Burnham.

Near-Term GBP/USD Forecast: UK Growth Data and US Retail Sales Awaited

Looking ahead, Thursday's UK GDP release is expected to provide the next significant catalyst for movement in the Pound to US Dollar (GBP/USD) exchange rate.

Economists anticipate that monthly economic growth returned to positive territory in May, with GDP forecast to rise from -0.1% to 0.1%.

A stronger reading could provide Sterling with additional support, although any gains may prove limited if the data continues to point to a sluggish and uneven recovery.

Across the Atlantic, investors will also be watching the latest US retail sales figures. Consumer spending is expected to have slowed noticeably during the previous month, while an increase in weekly jobless claims could add to concerns over the resilience of the US economy and place further pressure on the US Dollar.

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TAGS: Pound Dollar Forecasts