Pound Sterling Forecast: Politics and Jobless Claims in Focus for GBP

Modified: Wednesday, 22 July 2026 20:31 BST - Written by Minesh Chaudhari

STORY LINK Pound Sterling Forecast: Politics and Jobless Claims in Focus for GBP

The Pound to US Dollar (GBP/USD) exchange rate traded without a clear direction on Wednesday as investors assessed the latest UK inflation figures.

At the time of writing, GBP/USD was changing hands at approximately $1.3367, little changed from the start of Wednesday's session.

The Pound (GBP) remained broadly stable after the Office for National Statistics (ONS) published June's consumer price index.

The report showed headline inflation eased from 2.8% to 2.6%, falling below expectations for a more modest slowdown to 2.7% and marking the weakest annual rate of price growth since March 2025.

Ordinarily, a softer inflation reading would have weighed more heavily on Sterling by reinforcing expectations that the Bank of England (BoE) will be under less pressure to tighten monetary policy again this year.

However, losses were limited as core inflation proved more resilient than expected. Investors also remained mindful that the recent surge in energy prices, driven by renewed tensions in the Gulf, could cause inflationary pressures to strengthen again over the coming months.

The US Dollar (USD) regained momentum on Wednesday as escalating tensions in and around the Strait of Hormuz dampened global risk appetite.

An intensification of the conflict and continued disruption to one of the world's most important shipping routes pushed Brent crude close to $95 per barrel, heightening concerns over global energy supplies and prompting investors to favour traditional safe-haven currencies.

The jump in oil prices also fuelled speculation that higher energy costs could keep US inflation elevated, supporting expectations that the Federal Reserve may need to maintain a restrictive monetary policy stance for longer.

Near-Term GBP/USD Forecast: Political Developments Could Drive Sterling

Looking ahead to Thursday, the UK economic calendar is relatively quiet following a busy run of domestic data releases, leaving political developments as a potential driver of the Pound to US Dollar (GBP/USD) exchange rate.

Investors will continue monitoring the reaction of the gilt market to Andy Burnham's first days as Prime Minister. Any renewed concerns over the government's fiscal plans or borrowing strategy could limit support for Sterling.

Meanwhile, the US Dollar may come under modest pressure if the latest US initial jobless claims figures reveal a further increase in unemployment benefit applications, potentially reinforcing expectations of a softer US labour market.

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TAGS: Pound Dollar Forecasts