GBP/USD Forecast: Pound Sterling Gains as UK Fuel Prices Hit Record High

Modified: Monday, 28 September 2026 20:31 BST - Written by James Fuller

STORY LINK GBP/USD Forecast: Pound Sterling Gains as UK Fuel Prices Hit Record High

The Pound US Dollar (GBP/USD) exchange rate gained ground on Monday as UK diesel prices reached a record high, strengthening expectations of higher Bank of England (BoE) interest rates.

However, the pair’s advance remained limited.

At the time of writing, GBP/USD was trading at $1.3265 after briefly climbing to a five-day high.

The Pound (GBP) strengthened on Monday after UK diesel prices climbed to a new record, leading markets to raise their expectations for tighter Bank of England monetary policy in the months ahead.

Average diesel prices at UK forecourts reached 199.18p per litre, moving above the previous record set in June 2022 following Russia’s full-scale invasion of Ukraine.

Higher fuel costs can feed through into wider inflationary pressures, particularly if businesses reliant on diesel-powered transport pass increased operating expenses on to customers.

As the risk of renewed inflation became more prominent, markets began to anticipate a more hawkish approach from the BoE.

Meanwhile, the US Dollar (USD) found some support on Monday as fresh developments surrounding the Middle East crisis encouraged a degree of caution among investors.

Over the weekend, the US rejected an Iranian peace proposal that would have seen the Strait of Hormuz reopened within seven days.

President Donald Trump subsequently said he expected negotiations to resume shortly, although Tehran disputed his account.

However, developments in US-China trade relations offered some reassurance, preventing a decisive shift towards risk aversion.

Following in-person talks between President Trump and Chinese President Xi Jinping last week, both sides published lists outlining around $30bn each in tariff cuts, potentially providing a boost to Sino-American trade.

Near-Term GBP/USD Forecast: US Data and Middle East Tensions in Focus

Looking ahead, the latest US Job Openings and Labor Turnover Survey (JOLTS) is due on Tuesday.

A modest reduction in job vacancies could take some of the shine off the US Dollar.

At the same time, the ‘Greenback’ could find support if September’s consumer confidence reading comes in higher as forecast.

However, if escalating Middle East tensions and expectations of higher interest rates had a stronger-than-expected impact on consumer morale last month, the US Dollar could come under pressure instead.

For the Pound, Tuesday’s UK calendar is relatively quiet, putting the spotlight on domestic political developments.

Updates from the Labour Party Conference could consequently influence Sterling.

Bank of England policymaker Alan Taylor is also due to speak, and his remarks could help shape expectations around the central bank’s future policy.

Any dovish signals may add to the pressure on the Pound.

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TAGS: Pound Dollar Forecasts