Pound to Dollar Week Ahead Forecast: US Payrolls Could Decide 1.35 Break

Modified: Monday, 3 August 2026 07:31 BST - Written by Frank Davies

STORY LINK Pound to Dollar Week Ahead Forecast: US Payrolls Could Decide 1.35 Break

The Pound to Dollar exchange rate (GBP/USD) ended the week near 1.3482 after a sharp post-Federal Reserve advance, gaining around 1.2% from the previous Friday’s close.

Pound Sterling was also supported by three votes for an immediate Bank of England rate hike, although GBP/USD remains below July’s 1.3558 high ahead of a crucial week for US business and employment data.

GBP/USD Forecasts: US jobs test 1.35

Rabobank expects the Pound to Dollar exchange rate to retreat into a 1.32–1.33 range over the next one to three months.

According to Rabobank; “In RaboResearch’s view, the heavy lifting done by the market may help the Bank avoid an actual hike in policy rates.”

GBP/USD closed at 1.3482 on Friday after gaining for three successive sessions and recovering from levels below 1.3290 at the beginning of the week.

The pair gained 1.75% during July, but remains below the monthly high of 1.3558 and the May peak near 1.3658.

Rabobank expects markets to maintain expectations of further UK rate increases initially, but sees a risk that fiscal concerns and steady BoE rates will weigh on the Pound later.

The Federal Reserve voted 9–3 to leave interest rates unchanged at 3.50%–3.75%, with three members supporting an immediate quarter-point increase.

The Dollar weakened despite the dissenting votes as markets focused on Chair Kevin Warsh’s press conference and reduced expectations of a September increase.

Citi commented; “We read Chair Warsh’s comments at the press conference as dovish.”

It added; “The curve steepened materially as markets priced out September and October hikes.”

JP Morgan remains more positive on the US currency and described the Fed meeting as a “material setback” but “not the end of the long-USD trade just yet”.

The bank expects elevated inflation expectations and relatively high US yields to limit the scope for sustained Dollar losses.

The Bank of England also left rates unchanged at 3.75%, but Huw Pill, Megan Greene and Catherine Mann voted for an increase to 4.00%.

MUFG described the decision as a hawkish hold, although Governor Andrew Bailey warned markets against concluding that policymakers were “edging towards a hike”.

According to MUFG; “For GBP, the communication remains supportive, but the deliberate pushback against rate hike expectations limits the scope for upside.”

Final UK business surveys will be watched after the flash composite PMI recovered from 49.3 to 52.1 in July, with services returning to growth and manufacturing strengthening further.

Confirmation of the rebound would support Sterling, although the US calendar is likely to have the greater impact on GBP/USD.

The ISM manufacturing index will be released on Monday, followed by the services survey on Wednesday and the July employment report on Friday.

Strong US activity and payroll figures would revive expectations of a September Fed increase and could push GBP/USD back below 1.3400, bringing Rabobank’s 1.32–1.33 forecast into sharper focus.

Weak US data would reinforce the post-Fed decline in yields and increase the potential for a break above 1.3558.

A sustained move through that level would expose the May high near 1.3658, although MUFG’s assessment suggests the BoE alone is unlikely to drive a decisive Sterling breakout.

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TAGS: Pound Dollar Forecasts