GBP/USD Price Forecast: Pound Sterling Edges Up but Gains Limited

Modified: Thursday, 3 September 2026 22:46 BST - Written by Frank Davies

STORY LINK GBP/USD Price Forecast: Pound Sterling Edges Up but Gains Limited

The Pound US Dollar (GBP/USD) exchange rate edged higher on Thursday after hitting a 20-day low on Wednesday, although the recovery remained modest.

At the time of writing, GBP/USD was trading at $1.3496, leaving the pair only marginally higher on the day.

The Pound (GBP) struggled to establish a firm direction on Thursday as traders assessed the UK’s final services PMI figures.

Growth across the UK’s crucial services sector accelerated to a four-month high in August, but the final figure was marginally below the initial estimate.

The PMI climbed from 52.1 to 52.5, rather than the previously reported 52.8, curbing Sterling’s potential to push higher.

At the same time, GBP investors remained wary of rising UK government borrowing costs. Gilt yields reached a 19-year high on Wednesday, and while they edged lower on Thursday, they were still significantly higher across the week.

The US Dollar (USD) came under pressure on Thursday as a more positive tone across financial markets reduced demand for the safe-haven ‘Greenback’.

Global bond yields moved lower, helping to ease fears that rising borrowing costs could put a brake on economic growth around the world.

Expectations for Federal Reserve interest rate hikes also softened slightly, adding further pressure to the Dollar and supporting the broader appetite for risk.

The probability of a rate hike this month fell from 63% on Wednesday to 60% on Thursday, with the modest shift weighing on USD.

Near-Term GBP/USD Forecast: Non-Farm Payrolls Take Centre Stage

Looking ahead to Friday, the Pound could face fresh pressure as investors turn their attention to a speech from Bank of England (BoE) Governor Andrew Bailey.

If Bailey maintains a cautious stance on the prospect of further interest rate hikes, Sterling may find it difficult to sustain its position.

Conversely, highlighting the upside risks to inflation could support the Pound, particularly if Bailey indicates that tighter monetary policy may be required.

For the US Dollar, attention will centre on the latest non-farm payrolls report.

A weak increase in employment during August could weigh on the ‘Greenback’, especially if markets interpret the figures as reducing the likelihood of further Federal Reserve interest rate hikes.

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TAGS: Pound Dollar Forecasts