Pound to Dollar Forecast: GBP Faces 1.3140 as Fed Hike Bets Surge

Modified: Sunday, 15 November 2026 22:16 BST - Written by Frank Davies

STORY LINK Pound to Dollar Forecast: GBP Faces 1.3140 as Fed Hike Bets Surge

The Pound to Dollar exchange rate (GBP/USD) fell to four-week lows around 1.3205 as expectations of further Federal Reserve interest-rate hikes pushed the Dollar to its strongest level in 19 months.

Pound Sterling struggled despite resilient UK growth figures, with Scotiabank warning that a sustained break below 1.3200 could expose the 2026 low near 1.3140.

GBP/USD Forecasts: Hits Four-Week Lows

The Pound to Dollar (GBP/USD) exchange rate remained under heavy pressure at the end of the week, falling to four-week lows around 1.3205 as the Dollar extended its advance across global currency markets.

GBP/USD had initially attempted to stabilise above 1.3220, but persistent demand for the US currency pushed the pair lower.

The Dollar index climbed to a fresh 19-month high around 103.3, its strongest level since April 2025.

According to Scotiabank; “It’s not clear at this point that the pound has done enough to fully stabilize.”

A sustained break below 1.3200 would increase the risk of a deeper move towards the 2026 low around 1.3140 and potentially 1.3000.

Scotiabank added that a recovery through 1.3275/85 on a daily closing basis would be needed to ease the immediate downward pressure.

Fed Tightening Expectations Keep Dollar in Demand

Expectations of further Federal Reserve tightening have continued to underpin the Dollar.

Hotter-than-expected US inflation and a series of hawkish comments from Fed officials have convinced markets that another rate increase in December is highly likely.

ING commented; “The combination of hawkish Fedspeak and a US CPI beat earlier this week continues to pay dividends for the dollar.”

It added; “Importantly, this remains a rates-driven move.”

Federal Reserve Governor Christopher Waller has also put the possibility of a 50-basis-point December increase on the table, although a quarter-point rise remains the clear base case.

ING added; “We continue to see upside risks for the dollar in the coming days. The Fed's Chris Waller has put a 50bp December move on the radar, and that should keep markets biased towards hawkish interpretations of incoming data.”

MUFG also expects the Fed to tighten again, although it does not expect a 50-basis-point move.

The bank commented; “While we don’t expect a larger 50bps hike to be delivered in December, it is more likely now that the Fed could hike rates back-to-back in December and January.”

That outlook has helped keep US yields elevated and the Dollar well supported heading towards year-end.

Housing Weakness Fails to Derail Dollar Rally

There are signs that higher borrowing costs are beginning to take a heavier toll on the US economy.

Existing home sales fell 5.5% in October to an annualised rate of 3.75mn, down from 3.97mn previously and below consensus forecasts.

The reading was the weakest since August 2010.

NAR Chief Economist Lawrence Yun commented; “Home buying is difficult when mortgage rates have climbed to their highest levels since 2000, aside from a single month in 2023.”

He added; “As a result, home sales fell to their lowest level since August 2010.”

The housing data highlights the growing impact of tighter monetary conditions, but it has so far failed to materially reduce expectations of another Fed hike.

Kansas City Fed President Jeff Schmid reinforced the hawkish backdrop over the weekend, warning that inflation remains uncomfortably above target and that the central bank still has “some work to do” on price stability.

The Pound received only limited support from the latest UK growth figures.

Third-quarter GDP increased 0.7%, the strongest quarterly performance in two-and-a-half years, but the US rates story continued to dominate GBP/USD.

For the pair, 1.3200 remains the immediate downside level to watch.

A decisive break would expose 1.3140, while Sterling would need to recover above 1.3275-1.3300 to ease the current bearish momentum.

For now, persistent US inflation, hawkish Fed expectations and elevated Treasury yields continue to leave the Dollar firmly in control.

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TAGS: Pound Dollar Forecasts