Pound Sterling to Dollar Forecast: GBP Climbs Above 1.32 on UK GDP Beat

Modified: Friday, 16 October 2026 09:01 BST - Written by David Woodsmith

STORY LINK Pound Sterling to Dollar Forecast: GBP Climbs Above 1.32 on UK GDP Beat

Pound Sterling advanced against the US Dollar (USD) on Thursday after the latest UK GDP figures offered a more encouraging picture of the domestic economy than markets had anticipated.

At the time of writing, the GBP/USD exchange rate was trading at around $1.3258, up approximately 0.5% from Thursday's opening levels.

Better-than-expected growth figures gave the Pound (GBP) a lift on Thursday, with fresh data confirming that the UK economy continued to expand in August.

Figures from the Office for National Statistics (ONS) showed monthly GDP increased by 0.1%, comfortably beating forecasts for a 0.1% contraction.

Although growth slowed considerably from July's 0.4% expansion, the economy's ability to avoid a downturn provided some reassurance to Sterling investors amid elevated energy costs and an uncertain global backdrop.

The figures also strengthened expectations that the Bank of England (BoE) will raise interest rates in November, potentially bringing it into line with other central banks pursuing tighter monetary policy.

Meanwhile, the unexpected resilience of the economy could give Chancellor John Healey some additional breathing room as he prepares his first Autumn Budget.

A sustained sell-off in artificial intelligence (AI) stocks weighed on the US Dollar on Thursday, as growing unease across the technology sector prompted investors to reduce their exposure to US assets.

Having reached a year-to-date high on Wednesday, the 'Greenback' subsequently retreated as concerns mounted over the importance of AI investment to recent US economic performance.

Any prolonged downturn in the sector could undermine one of the key sources of optimism surrounding the American economy.

However, the Dollar's decline began to ease as the US trading session got underway.

Stronger-than-expected producer price figures and consumer spending data offered some support, helping to temper the broader wave of selling.

Near-Term GBP/USD Forecast: Bailey and Warsh Speeches Could Drive Volatility

Attention now turns to Friday's speeches from Bank of England Governor Andrew Bailey and Federal Reserve Chair Kevin Warsh, both of whom could influence the direction of the Pound to US Dollar exchange rate.

Bailey's remarks will be of particular interest to Sterling traders.

Any clearer indication that the BoE intends to resume raising interest rates in November could reinforce expectations for tighter monetary policy and provide further support to the Pound.

Across the Atlantic, uncertainty surrounding the prospect of an October rate increase from the Federal Reserve leaves the US Dollar vulnerable to shifts in Warsh's messaging.

A signal that policymakers remain open to raising borrowing costs this month could prompt renewed demand for the 'Greenback', potentially reversing some of its recent losses.

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TAGS: Pound Dollar Forecasts