Pound-to-Dollar Forecast: Hot US Inflation Boosts USD, GBP Slides

Modified: Wednesday, 11 November 2026 14:01 BST - Written by Frank Davies

STORY LINK Pound-to-Dollar Forecast: Hot US Inflation Boosts USD, GBP Slides

The Pound to Dollar exchange rate (GBP/USD) retreated below 1.3400 as stronger-than-expected US inflation data and hawkish Federal Reserve commentary triggered renewed Dollar buying.

Markets increased bets on a December Fed rate hike, while Scotiabank warned that a sustained break below 1.3400 could expose Sterling to further losses towards the low-to-mid 1.33s.

GBP/USD Forecasts: Dip Below 1.3400

After hitting highs close to 1.3460, the Pound to dollar (GBP/USD) exchange rate retreated to 1.3380 after the New York open.

Scotiabank noted that GBP/USD failed to secure fresh buying support and was blocked at 1.3460. It added; “loss of a broad zone of support around the figure area [1.3400] may drive the pound back to the low/mid-1.33s.

According to UoB; “The sharp fluctuations have left momentum indicators mixed. From here, GBP could trade in a range between 1.3360 and 1.3500.”

Stronger than expected US inflation data triggered renewed dollar gains, especially as equity markets lost initial gains. The Pound was also subjected to a limited correction after recent gains, although overall sentiment held firm.

ING commented; “A further improvement in risk sentiment should strip the dollar of the small residual gains from the selloff. But the macro story may incidentally work in the dollar’s favour, leaving risks for the greenback rather balanced, in our view, by the end of the week.”

US headline consumer prices increased 0.4% for October after a 0.6% increase the previous month and above consensus forecasts of 0.3%. Core prices increased 0.3% on the month compared with expectations of a 0.2% increase. There were no year-on-year figures as the government shutdown prevented a CPI release last year.

Following the data, markets are now pricing in around an 85% chance of a December hike from 80% ahead of the data.

There were also hawkish comments from Fed Governor Waller. According to Waller; “while the precise timing of the hikes doesn’t matter, ensuring that the promised hikes are implemented in a reasonable period of time does.” He stated that he would back at least a 25 basis-point hike in December and potentially a 50 basis-point move.

Scotiabank commented; “Hawkish comments from the Fed’s Waller (BoG, voting) appear to be pulling the outlook for relative central bank policy back into the market’s crosshairs following a period of sentiment-driven movement dominated by tech and geopolitics.”

MUFG added; “An endorsement of Waller’s hawkishness would likely deliver additional near-term USD strength.”

Energy prices will also be watched closely after recent losses. Brent traded at 6-week lows on Tuesday amid hopes for some form of US-Iran deal.

MUFG commented; “If there is further progress towards a US-Iran deal to end the conflict it would help to sustain lower energy prices and ease pressure on major central banks including the Fed to keep hiking rates.”

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TAGS: Pound Dollar Forecasts