Pound to US Dollar Forecast: GBP/ Hits 12-Week Low as Fed Rate Bets Surge

Modified: Thursday, 24 September 2026 12:31 BST - Written by David Woodsmith

STORY LINK Pound to US Dollar Forecast: GBP/ Hits 12-Week Low as Fed Rate Bets Surge

The Pound to Dollar exchange rate (GBP/USD) has slumped to 12-week lows around 1.3250 after exceptionally strong US business surveys reinforced expectations of further Federal Reserve tightening.

The break below 1.3300 has weakened Sterling's technical position, while the Dollar continues to draw support from rising US yields and mounting expectations of rate hikes in both October and December.

GBP/USD Forecasts: Slide to 12-Week Lows

The Pound was unable to make any headway on Wednesday while the dollar maintained a strong tone as the currency index hit a fresh 2-month high.

Strong US data reinforced expectations that the Federal Reserve would have to increase interest rates again at the October meeting which boosted the US currency.

The Pound to Dollar (GBP/USD) exchange rate slumped to 12-week lows at 1.3250 after breaking below the 1.3300 support area.

Unless the Pound can regain ground quickly, there is an increased risk that it will lose further ground and test June lows just below 1.3150.

ING commented; “The dollar continues to show very good resilience to lower energy prices and a risk-friendly environment. It’s another sign that the Fed story is dominant, and the hawkish Fedspeak is enough to keep USD in demand.”

The bank added; “We retain the view that the dollar faces upside risks over the next couple of weeks, when a revamp of data releases can prompt markets to add bets on an October hike.”

Geo-political developments will be watched very closely, especially with President TRump and Chinese President Xi due to hold talks on Thursday.

The dollar has proved resilient despite a further decline in oil prices with markets focussed on the potential for further Fed rate hikes..

The US PMI manufacturing index strengthened to a 52-month high of 57.0 from 53.9 previously while the services-sector index strengthened to a 59-month high of 58.7 from 56.5 in August.

Input prices increased at the fastest rate since October 2022 and there was also strong upward pressure on output charges.

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence commented; “US business continues to boom, with output growing at the fastest rate for over five years in September.”

He added; “However, this growth is being accompanied by some of the most severe supply chain bottlenecks seen in the near-two-decade survey history if the pandemic is excluded, with companies also reporting increasing problems finding suitable staff.”
The evidence of increasing inflation pressure will maintain pressure for a tighter monterey policy.

Markets are now pricing in over a 50% chance that the Fed will increase rates in both October and December which would reinforce positive rate differentials for the US currency. The US 10-year bond yield also jumped to fresh 3-year highs.

The UK data was mixed with the PMI manufacturing index advancing to a 3-month high of 52.0 from 51.7 previously, but the services-sector index retreated to a 3-month low of 51.7 from 52.5.

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TAGS: Pound Dollar Forecasts