Pound to Dollar Forecast: Hawkish Warsh Sends GBP to 10-Day Lows

Modified: Tuesday, 1 September 2026 07:01 BST - Written by David Woodsmith

STORY LINK Pound to Dollar Forecast: Hawkish Warsh Sends GBP to 10-Day Lows

The Pound to Dollar exchange rate (GBP/USD) has slipped to 10-day lows around 1.3525 after Federal Reserve Chair Kevin Warsh used his Jackson Hole speech to reinforce concerns over persistent US inflation. Markets have responded by raising the probability of a September Fed rate hike to around 60%, providing renewed support for the Dollar and leaving the important 1.3500 area in focus for Sterling.

GBP/USD Forecasts: Holds Above 10-Day Lows

The dollar posted net gains following hawkish comments from Federal Reserve Chair Warsh’s comment on Friday.

The Pound to Dollar (GBP/USD) exchange rate dipped to 10-day lows around 1.3525 before trading around 1.3545 on Monday. Trading ranges were narrow with UK markets closed for a holiday.

There is important GBP/USD support in the 1.3500 area.

According to UoB; “Today, GBP may edge lower, but any decline should remain within a range of 1.3520/1.3570.”

From a slightly longer-term view, it added; “The risk remains on the downside, and the level to watch is 1.3480. Overall, GBP is likely to remain under pressure as long as it holds below 1.3600.”

In his speech at the Jackson Hole symposium, Warsh expressed some unease over underlying inflation trends and added; “we must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do.”

Cleveland Fed President Hammack, who voted for a hike in July, maintained a hawkish stance and continued to back an immediate rate hike.

MUFG commented; “While stopping short of explicitly backing a September rate hike, Warsh stressed that inflation remains insufficiently contained, reaffirmed the Fed's commitment to its 2% target, and argued that current financial conditions are not restrictive. He also noted that recent improvements in inflation data are not yet enough to signal a meaningful improvement in underlying price trends.”
According to Elwin de Groot, head of macro strategy at Rabobank; "Warsh's prepared remarks seemed designed to lift rate-hike expectations, rebalance the September debate towards the hawks and rebuild his inflation-fighting credibility."
He added; "Warsh delivered an important signal: the Fed is not relying on tighter financial conditions alone and remains willing to tighten further if underlying inflation stalls."
In response, markets now consider that there is close to a 60% chance that the Fed will hike rates at the September meeting.

ING still considers that there is a high degree of uncertainty; “We are far more constructive on inflation, and its path lower through 2027, and without the need for hikes. But there may well be a sense here that the wider FOMC might not have the same patience that we have on the timing of inflation falls. As it is, the September meeting is now a market toss-up.”

According to Rabobank; “The next round of economic data – especially the Employment Report on September 4 and the CPI on September 11 – could be crucial to the swing voters in the Committee.”

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Pound Dollar Forecasts