Pound Sterling to Dollar Forecast: GBP/USD Bounces from 7-Week Lows

Modified: Wednesday, 23 September 2026 17:31 BST - Written by Frank Davies

STORY LINK Pound Sterling to Dollar Forecast: GBP/USD Bounces from 7-Week Lows

The Pound to Dollar exchange rate (GBP/USD) has recovered towards 1.3360 after briefly touching seven-week lows below 1.3330, with buyers again emerging around an important support zone.

The Dollar remains underpinned by hawkish Federal Reserve rhetoric and expectations of further tightening, although markets are also pricing a substantial chance of a November Bank of England hike, providing Sterling with some protection.

GBP/USD Forecasts: Bouncing from 7-Week Lows

The Pound to Dollar (GBP/USD) exchange rate briefly dipped to 7-week lows just below 1.3330 before settling around 1.3360. At this stage, markets are expecting the Federal Reserve to raise interest rates again before year end which underpinned the dollar with the currency index hitting 7-week highs before a slight retreat.

Scotiabank is still broadly positive on the Pound outlook; “The GBP’s short-term price action confirms the importance of support in the mid-1.33s as we see limited resistance ahead of the 1.3450/1.3500 range. The recovery in momentum is equally important, and also offering positive divergence with the RSI failing to confirm the latest weakness in spot.”

UK data was mixed. The CBI manufacturing orders index improved to -9 for September from -25 the previous month and compared with consensus forecasts of -33.

CBI Senior Economist Cameron Martin commented; "There are growing signs that conditions are stabilising for manufacturers, with a marked improvement in order books for the second consecutive month.

The ONS reported that the government borrowing requirement increased to £18.3bn for August from £15.4bn the previous year.

The data, together with higher debt interest payments, maintained market fears surrounding the UK debt position, although UK yields edged lower amid a further retreat in energy prices.

Scotiabank commented; “Asset managers appear to be warning Chancellor Healey against making changes to capital gains taxes, adding to recent comments from the banking industry against income tax changes to financial institutions.”

It added; “The government’s commitment to fiscal responsibility remains strong, though measures of GBP sentiment appear to be slipping somewhat.”

The dollar held a firm tone despite the further decline in oil prices with the currency supported by hawkish commentary from Fed officials.

MUFG noted; “The US rate market is expecting the Fed to deliver three more hikes in the year ahead. Those expectations were supported by hawkish comments yesterday from regional Fed presidents although neither are voting members this year.”

ING commented; “Fedspeak will continue to have the potential to break the oil-USD relationship during periods of falling energy prices, as the Fed is viewed as being more fundamentally focused on inflation while other developed central banks are seen as more sensitive to oil price dynamics.”

MUFG, however, considers that other G7 central banks could adopt more hawkish policies. In this context, markets are pricing in around a 75% chance of a November BoE rate hike which could provide near-term Pound protection.

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TAGS: Pound Dollar Forecasts