Pound Sterling Forecast: UK GDP Beats Monthly Forecast as Dollar Holds Firm

Modified: Thursday, 13 August 2026 08:51 BST - Written by David Woodsmith

STORY LINK Pound Sterling Forecast: UK GDP Beats Monthly Forecast as Dollar Holds Firm

The Pound US Dollar (GBP/USD) exchange rate remained close to the $1.35 level on Thursday after the latest UK GDP figures pointed to resilient economic growth.

At the time of writing, GBP/USD was trading at around $1.3480, down modestly on the day after briefly trading above $1.3500 earlier in the session.

The Pound (GBP) received some support after the Office for National Statistics reported that the UK economy expanded by 0.4% during the second quarter.

The reading matched market expectations and represented a slowdown from growth of 0.6% during the first quarter.

However, the monthly data proved more encouraging.

UK GDP increased by 0.3% in June, comfortably exceeding forecasts for no growth, while May's figure was revised to show the economy stagnated rather than expanding by 0.1%.

Services output increased by 0.4% during June, helping to offset a 0.2% decline in production and a 0.1% contraction in construction.

The figures suggested that the UK economy weathered the disruption from the Middle East conflict better than feared during the second quarter.

Nevertheless, Sterling's response remained relatively restrained as investors continued to question whether the pace of growth can be sustained during the second half of the year.

The US Dollar (USD) remained relatively resilient on Thursday despite softer US inflation data reducing expectations for another Federal Reserve interest-rate hike.

Headline inflation eased from 3.5% to 3.4% in July, while core inflation slowed from 2.6% to 2.5%.

The figures prompted markets to reduce the probability of a September Federal Reserve rate increase to around 40%, down from 54% a week earlier.

However, investors have not completely ruled out further tightening.

Underlying inflation remains above the Federal Reserve's 2% target, while higher global energy prices continue to create uncertainty over the medium-term outlook.

As a result, the Dollar was able to resist more substantial selling pressure, limiting GBP/USD's ability to capitalise on the stronger-than-expected UK monthly growth data.

Near-Term GBP/USD Forecast: Can Sterling Reclaim $1.35?

Looking ahead, the Pound to US Dollar exchange rate may struggle to establish a sustained move above $1.35 unless upcoming US data reinforces expectations that the Federal Reserve will remain on hold.

The stronger June GDP reading should provide some support for Sterling by reducing fears of an immediate UK slowdown.

However, with second-quarter growth merely matching forecasts, the figures may not be strong enough on their own to drive a significant repricing of Bank of England expectations.

For the US Dollar, attention will now turn to retail sales and consumer sentiment figures.

Evidence of weaker US consumer demand could further reduce expectations for a September rate hike and potentially allow GBP/USD to climb back above $1.35.

Conversely, stronger-than-expected US data could reinforce the Dollar's resilience and push the pairing back towards the $1.3450 region.

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TAGS: Pound Dollar Forecasts