Pound to Dollar Forecast: Sterling Recovers as ING Warns of Dollar Correction

Modified: Tuesday, 10 November 2026 16:31 BST - Written by Frank Davies

STORY LINK Pound to Dollar Forecast: Sterling Recovers as ING Warns of Dollar Correction

The Pound to Dollar exchange rate (GBP/USD) recovered towards 1.3420 as easing geopolitical tensions and a steadier tone in equity markets reduced demand for the US currency.

Sterling attracted renewed buying interest after finding support near 1.3350, although stronger-than-expected US employment data and expectations of another Federal Reserve rate hike could limit gains ahead of this week's inflation figures.

GBP/USD Forecasts: Rebound

The Pound to Dollar (GBP/USD) exchange rate found support close to 1.3350 on Friday and recovered towards 1.3420 on Monday as the Dollar lost some ground in global markets.

Key short-term resistance for the pair remains around 1.3500, while UoB sees scope for GBP/USD to revisit the August high around 1.3675 if upward momentum strengthens.

ING commented; “We think the dollar rally requires the risk-off mood to persist this week. Otherwise, there is some moderate correction risk, as Friday’s move looked a bit too stretched relative to short-term market drivers.”

A more stable tone across equity markets has reduced defensive demand for the Dollar, while Sterling has remained relatively resilient.

There is still a high degree of uncertainty surrounding the Middle East, however, and developments in both equities and energy markets will continue to be watched closely.

Oil prices moved lower on Monday, easing some of the inflationary pressure that had supported the Dollar and pushed global yields higher.

ING also highlighted political developments in Israel, noting that opposition leader Gadi Eisenkot has been given the mandate to try to form a government after recent political turmoil.

The prospect of a potentially more diplomatic approach towards Iran has contributed to some easing in geopolitical risk, although the situation remains fluid.

Barclays noted recent weakness in AI-related equities but added; “At the same time, however, economic realities continue to surprise to the upside — data momentum remains very strong across indicators.”

It added; “This combination is yet to dent the dollar's appeal.”

Strong US Payrolls Keep Fed Hike Expectations Alive

Friday’s US employment report was significantly stronger than expected.

Non-farm payrolls increased by 165,000 in October compared with consensus forecasts around 65,000, while the previous month’s increase was revised to 60,000.

The unemployment rate edged lower to 4.1% from 4.2%, while the household survey recorded a strong increase in employment.

MUFG commented; “Overall, the report provides further evidence that the US labour market is continuing to strengthen alongside stronger economic activity in recent quarters which will encourage the Fed to tighten policy further.”

The bank added; “However, with the risk of second round inflation effects from the labour markets still appearing contained the report does not significantly increase pressure on the Fed to speed up plans for hikes helping to dampen upward pressure on US yields and the US dollar.”

Markets continue to price a strong probability of a December Federal Reserve rate increase, although the exact odds have eased slightly from Friday’s immediate post-payroll peak.

This leaves the Dollar supported by relatively strong US fundamentals, but less dominant than during last week’s risk-off phase.

US Inflation Data Next Major Test

The next major test for the Dollar will be the latest US consumer-price data.

Markets expect monthly increases of around 0.3% for both headline and core inflation.

A stronger-than-expected reading would reinforce the case for a December Fed hike and could push GBP/USD back towards support around 1.3350.

Conversely, softer inflation would reduce pressure on the Fed to tighten again and could allow Sterling to challenge the 1.3500 area.

For now, GBP/USD remains supported by dip buying and an easing in risk aversion, while the Dollar’s underlying strength is being maintained by resilient US economic data.

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TAGS: Pound Dollar Forecasts