Pound to Dollar Price Forecast: GBP Steady with “Dots to Dictate Reaction”

– Written by


Frank Davies

STORY LINK Pound to Dollar Price Forecast: GBP Steady with “Dots to Dictate Reaction”

The Pound to Dollar exchange rate (GBP/USD) traded steadily above $1.33 on Wednesday as markets positioned themselves ahead of the Federal Reserve’s final interest rate decision of the year.

At the time of writing, GBP/USD was trading near $1.3310, almost unchanged from the start of the session.

The US Dollar (USD) was muted through Wednesday’s European trade as investors assessed the likely outcome of the Federal Reserve’s evening policy announcement.

Expectations around a December rate cut have swung sharply in recent weeks, but market consensus has now solidified around a 25-basis-point reduction.

With the move largely priced in, attention has shifted to what may come next. Forward guidance from the Fed still holds the potential to move the Dollar, especially if Chair Jerome Powell strikes a firmer tone, as he did following October’s meeting.

According to Scotiabank, “After USD gains earlier this week and markets perhaps expecting a (mildly) “hawkish cut” today, traders are poorly positioned for messaging that leans somewhat dovish.

“After a 25bps cut today, swaps do not have another rate cut fully priced in until mid-2026.

“Beyond the rate decision, forecasts and the dots will dictate the market’s reaction.

“No changes are expected in the median dot for the next few years.

“The consensus does expect a mild nudge lower for the long-term median (i.e., terminal rate) dot to 3%, however, which would align a little closer to current market thinking.”

Traders will also parse the updated Summary of Economic Projections (SEP). Should policymakers maintain guidance for just one rate cut in 2026, compared with market expectations for at least two, the US Dollar could receive renewed support.

The Pound (GBP) treaded water on Wednesday, with the absence of UK economic data leaving Sterling without a clear catalyst.

Price action was largely guided by broader market sentiment, with traders hesitant to establish strong positions ahead of the Fed’s announcement.

This caution kept the Pound rangebound, contributing to the subdued tone across GBP/USD markets.

GBP/USD Forecast: Modest UK GDP Uptick to Provide Limited Support?

Beyond the Fed decision, focus will shift to the UK’s upcoming GDP release for October.

Economists expect the data to show the economy returning to growth for the first time since June, although only by around 0.1%. Such a muted rebound may provide limited support for Sterling and could instead reinforce concerns over the UK’s lacklustre economic trajectory.

Weak growth prospects would likely strengthen expectations of a Bank of England (BoE) interest rate cut next week, potentially limiting GBP upside.

On the US front, the Dollar may encounter headwinds on Thursday if initial jobless claims point to a larger-than-expected rise in early December, adding weight to the argument for a more accommodative Fed.

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TAGS: Pound Dollar Forecasts