Pound-to-Dollar Forecast: Energy Fears Push GBP/USD to Five-Week Lows

Modified: Tuesday, 15 September 2026 12:51 BST - Written by Frank Davies

STORY LINK Pound-to-Dollar Forecast: Energy Fears Push GBP/USD to Five-Week Lows

The Pound to Dollar exchange rate (GBP/USD) has fallen to five-week lows around 1.3465 as another surge in energy prices strengthened the US Dollar ahead of this week's pivotal Federal Reserve decision.

With Brent crude around $105 per barrel and US Treasury yields close to 5%, markets are now pricing an almost 90% probability of a Fed rate hike, leaving Sterling under pressure below 1.35.

GBP/USD Forecasts: Hit 5-week Lows

The dollar posted gains on Monday with the Pound to Dollar (GBP/USD) exchange rate dipping back below 1.3500 with 5-week lows around 1.3465. The dollar has held firm ahead of a huge week for fundamentals with key central bank meetings, fiscal concerns and energy-sector fears.

Scotiabank is not convinced that GBP/USD will see sustained losses of 1.3480 while also noting further support at 1.3450 and 1.3420.

Oil prices have been subjected to further upward pressure amid fears that exports from Saudi Arabia will decline further amid Houthi control of the Red Sea shipping routes. Brent traded around $105 p/b and close to 4-month highs.

ING commented; “Externally, oil prices are rising again today after Saudi Arabia shut the East-West pipeline following drone attacks from Iraq.”

The dollar has gained net support from the increase in energy prices.

Elsewhere, bond markets will be a key element with renewed upward pressure on yields on Monday. The US 10-year yield is close to 5.00% while the UK 10-year yield is around 5.35% at fresh 19-year highs.

Central bank meetings will be crucial this week with the Federal Reserve and Bank of England rate decisions on Wednesday and Thursday respectively. The big moves in energy and bond markets will be key elements for the banks.

RSM chief economist Thomas Pugh expects inflation will peak close to 4% and commented; "The problem is that the energy shock is becoming harder to look through. Higher energy prices will lift headline inflation over the coming months."

There has been a further shift in market pricing with traders now pricing in close to a 90% chance that the Fed will hike rates to 4.00%.

ING commented; “Consensus is nearly unanimous, and markets are pricing 22bp. That may suggest limited USD upside on the day, but the currency still has room to catch up with higher front-end rates, while the Fed may retain a hawkish tone given the bond market’s demand for policy credibility and recent rise in energy prices.”

According to MUFG; “It [a rate hike] would provide some much- needed support for the USD although may not prove sufficient on its own to trigger a significant rebound. If doubts remain over how much further the Fed is willing to hike rates in the near-term given the close proximity of the US mid-term elections in November, it could curtail USD upside.”

It added; “On the other hand, if the Fed decides to leave rates on hold again to buy more time to assess policy, it could trigger a sharper USD sell-off by fuelling fears that they are falling behind the curve in fighting inflation.”

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TAGS: Pound Dollar Forecasts