Pound-to-Dollar Forecast: Safe-Haven USD Demand Caps GBP Recovery

Modified: Wednesday, 29 July 2026 11:16 BST - Written by Ben Hughes

STORY LINK Pound-to-Dollar Forecast: Safe-Haven USD Demand Caps GBP Recovery

The Pound to US Dollar (GBP/USD) exchange rate remained close to a three-week low on Tuesday as another bout of weakness in technology shares dampened market sentiment.

At the time of writing, GBP/USD was trading at around $1.3228, slightly down from Tuesday's opening levels.

The US Dollar (USD) retained a firm footing on Tuesday as investors continued to seek the safety of the 'Greenback' amid a prolonged selloff in global technology stocks.

The latest wave of risk aversion was driven by heavy losses across semiconductor and artificial intelligence-related companies, with investors becoming increasingly concerned about the scale of borrowing undertaken to finance AI infrastructure projects.

At the same time, growing competition from Chinese chip manufacturers added to pressure in global equity markets.

Even so, broader gains for the US Dollar remained limited as the improving geopolitical backdrop in the Middle East helped temper demand for traditional safe-haven assets.

The Pound (GBP) traded without a clear direction on Tuesday as the lack of significant UK economic data left investors with little fresh incentive to reposition.

Sterling also remained anchored by caution ahead of Thursday's Bank of England (BoE) policy announcement.

Markets overwhelmingly expect policymakers to leave interest rates unchanged at 3.75%, meaning the accompanying guidance is likely to determine the Pound's next move.

Should the BoE refrain from hinting that further policy tightening remains a possibility later this year, Sterling could struggle to attract meaningful support.

Near-Term GBP/USD Forecast: Fed Decision to Drive Midweek Trade

Attention will shift to the Federal Reserve on Wednesday as the US central bank announces its latest interest rate decision.

Although the Fed is expected to leave borrowing costs unchanged, investors will closely scrutinise the accompanying statement for clues on the future path of monetary policy.

While Chair Kevin Warsh has moved away from providing explicit forward guidance, markets will still be looking for signals that policymakers remain open to another interest rate increase in September.

Until then, the Pound to US Dollar (GBP/USD) exchange rate may remain trapped within a narrow range as traders await the outcome of both the Federal Reserve and Bank of England meetings.

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TAGS: Pound Dollar Forecasts