GBP/USD Forecast: Pound Sterling Jumps 0.5% as Risk Rally Hits US Dollar

Modified: Monday, 9 November 2026 20:01 BST - Written by David Woodsmith

STORY LINK GBP/USD Forecast: Pound Sterling Jumps 0.5% as Risk Rally Hits US Dollar

The Pound to US Dollar (GBP/USD) exchange rate rallied on Monday as a recovery in global stock markets and renewed hopes of peace in the Middle East weakened demand for the safe-haven US Dollar.

At the time of writing, GBP/USD was trading at around $1.3417, up 0.5% on the day.

The US Dollar (USD) weakened against most of its major peers as investors returned to riskier assets following last week's sharp sell-off in technology stocks.

Equity markets recovered some of their recent losses, easing concerns about the outlook for the artificial intelligence sector after fears of tighter regulation under a Democrat-controlled Congress had unsettled investors.

Friday's stronger-than-expected US employment figures also helped restore confidence in the American economy, encouraging investors to move away from defensive positions.

The improving mood was reinforced by renewed hopes of a diplomatic breakthrough in the Middle East.

US President Donald Trump was due to meet Qatar's Prime Minister, with Doha continuing to play an important mediating role in efforts to ease tensions between Washington and Tehran.

The prospect of progress towards a peace agreement helped push oil prices lower, with crude retreating towards the two-month lows reached following last week's US mid-term elections.

Falling energy prices offered some relief to investors concerned about the impact of elevated oil costs on inflation and global economic growth.

Together, the recovery in equities and easing geopolitical concerns reduced demand for the safe-haven 'Greenback', allowing GBP/USD to recover above $1.34.

The Pound (GBP), meanwhile, strengthened against several major currencies as investors continued to assess last week's hawkish Bank of England (BoE) interest rate decision.

The Monetary Policy Committee voted unanimously to raise Bank Rate by 25 basis points to 4%, with one member favouring a larger increase.

The accompanying guidance also suggested that further tightening could be necessary to contain persistent inflation pressures.

This has helped sustain expectations of additional UK interest rate increases over the coming year, providing underlying support for Sterling.

However, investors remain uncertain about how much further the BoE can raise borrowing costs without undermining the UK's economic recovery.

Attention is also turning towards Thursday's preliminary third-quarter GDP figures, which are expected to show an acceleration in UK economic growth.

A stronger reading would offer some reassurance that the economy is proving resilient despite higher interest rates, potentially strengthening the case for further monetary tightening.

Near-Term GBP/USD Forecast: US Inflation Could Test Sterling's Recovery

The Pound to US Dollar exchange rate could face a significant test on Tuesday with the publication of the latest US consumer price index (CPI).

Headline inflation is forecast to have accelerated from 3.7% to 3.9% in October, while core inflation is expected to have risen from 2.6% to 2.8%.

Figures in line with expectations would reinforce concerns that US price pressures remain persistent, potentially strengthening the case for another Federal Reserve interest rate increase in December.

A stronger-than-expected reading could provide the Dollar with additional support, particularly if investors respond by raising their expectations for further monetary tightening.

This could put pressure on GBP/USD following Monday's recovery, potentially bringing the $1.3400 level back into focus.

Conversely, softer inflation figures could weaken expectations of a December rate hike and allow Sterling to extend its gains against the 'Greenback'.

The Pound will also be sensitive to comments from two Bank of England policymakers on Tuesday.

Deputy Governor Clare Lombardelli is scheduled to speak during the afternoon, followed by Chief Economist Huw Pill later in the evening.

Investors will be looking for indications of whether both officials support the market's expectations for multiple additional rate increases over the coming year.

Hawkish remarks could reinforce Sterling's recent strength, particularly if US inflation falls short of forecasts.

However, any suggestion that the BoE may need to slow its tightening cycle could weigh on the Pound, even if broader market sentiment remains positive.

With GBP/USD trading around $1.3417, the immediate focus will be on whether the pairing can sustain its recovery above $1.34.

Further gains could bring the $1.3500 threshold back into view, although a stronger US inflation reading may make another advance more difficult.

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TAGS: Pound Dollar Forecasts