Pound Sterling to Dollar Forecast: Hawkish BoE Split Offsets Softer USD

Modified: Thursday, 30 July 2026 13:56 BST - Written by Ben Hughes

STORY LINK Pound Sterling to Dollar Forecast: Hawkish BoE Split Offsets Softer USD

The Pound to US Dollar (GBP/USD) exchange rate edged higher on Thursday after the Bank of England left interest rates unchanged but delivered a more hawkish vote than markets had expected.

At the time of writing, GBP/USD was trading at around $1.3390, up modestly on the day and above Wednesday’s pre-Federal Reserve levels.

The US Dollar (USD) came under pressure after the Federal Reserve left interest rates unchanged at 3.50%–3.75% on Wednesday evening.

The decision was widely expected, although three policymakers voted in favour of an immediate 25-basis-point increase amid continued concern over inflation.

Federal Reserve Chair Kevin Warsh reiterated the central bank’s commitment to returning inflation to its 2% target but provided few clear signals over the timing of the next policy move.

Warsh acknowledged that policymakers could become more inclined to tighten policy if underlying inflation continued to rise, although he stopped short of endorsing a September rate hike.

Markets subsequently reduced their expectations of a rate increase at the next meeting, placing pressure on short-term US yields and the Dollar.

Longer-term Treasury yields moved higher, however, as investors questioned whether the Federal Reserve was doing enough to contain persistent inflation pressures.

The Pound found some support after the Bank of England left Bank Rate unchanged at 3.75%, in line with expectations.

The Monetary Policy Committee voted 6–3 to keep rates on hold, compared with market expectations for a 7–2 split.

Three policymakers instead backed an immediate rate increase as they expressed concern that higher energy prices could lead to more persistent inflation.

The Bank noted that UK inflation had fallen faster than expected to 2.6%, but warned that elevated and volatile energy prices associated with the Middle East conflict would push inflation higher again later in the year.

Governor Andrew Bailey said that interest rates were currently at an appropriate level, while stressing that policymakers would ensure any renewed increase in inflation remained temporary.

The more hawkish vote offered Sterling limited support, although the Pound’s gains were restrained by the Bank’s wider wait-and-see stance.

Near-Term GBP/USD Forecast: Pound Could Test $1.34 Resistance

The near-term Pound to US Dollar outlook is likely to remain sensitive to shifting expectations surrounding both central banks.

The more divided Bank of England vote has increased the possibility of a UK rate hike later this year, particularly if energy prices remain elevated and inflation proves more persistent than expected.

This could allow GBP/USD to test resistance around $1.3400.

A sustained move above this level may bring the $1.3450 region back into focus, followed by the recent highs near $1.3550.

Conversely, Sterling could lose ground if weaker UK labour-market conditions and subdued wage growth convince investors that the Bank will remain on hold for an extended period.

On the downside, initial support is located around $1.3350, with a break below this level potentially exposing $1.3300.

Meanwhile, the US Dollar will remain sensitive to incoming inflation and employment data, with stronger figures likely to revive expectations of a September Federal Reserve rate increase.

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TAGS: Pound Dollar Forecasts