– Written by
Tim Boyer
STORY LINK Pound Sterling to Dollar Forecast: GBP Consolidates as USD Recovery Caps Gains
The Pound to Dollar exchange rate (GBP/USD) is consolidating near 1.37 as easing global market panic and stabilising US dollar sentiment curb Sterling’s rally, with traders now turning their focus to the Bank of England interest rate decision and evolving Federal Reserve policy expectations.
GBP/USD Forecasts: Consolidation Near 1.3700
The Pound to Dollar (GBP/USD) exchange rate has been held in narrow ranges on Wednesday, settling around 1.3680 after the US open after failing to hold above 1.37. The dollar has driven market moves with the panic seen last week continuing to abate while UK traders were waiting for Thursday’s Bank of England policy decision with no change in rates expected.
According to Scotiabank the Pound outlook is still positive; “In terms of technicals, momentum remains bullish. We look to near-term support at 1.3620 and see limited resistance ahead of 1.3800.”
UoB is not expecting a near-term breakout; “The price movements still appear to be part of a range-trading phase. It expects near-term support around 1.3665.
HSBC global head of forex research Paul Mackel does not expect fireworks from the Bank of England this week.
According to Mackel; “For the BoE, a pause by the Monetary Policy Committee at 3.75% is widely expected and the messaging is unlikely to matter much for the pound other than additional easing is to come.”
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ING considers that the underlying dollar outlook has improved; “The fact that the dollar didn’t suffer yesterday from the US tech selloff is an indication that – while its safe haven value is still diminished – market jitters about a US-driven USD selloff have eased significantly.”
Scotiabank is not convinced over a dollar recovery; “We are not persuaded that the USD has turned a corner and while the DXY is positive today, yesterday’s price movement suggests the past week’s rebound may be stalling.
The latest ADP data recorded an increase in private payrolls of 22,000 for January, below consensus forecasts of around 45,000 and following a downwardly-revised gain of 37,000 for December.
According to ADP chief economist Dr. Nela Richardson commented; “Job creation took a step back in 2025, with private employers adding 398,000 jobs, down from 771,000 in 2024.”
ING commented on the data; “Considering the Fed’s more hawkish stance at the January meeting, some clear deterioration in the jobs market would be needed for a cut to be priced before June.”
Commerzbank senior forex analyst Antje Praefcke took a similar view; “In this respect, labour market data in particular would have to be weak in order to reignite speculation about interest rate cuts and possibly put the dollar under downward pressure again, Warsh or no Warsh.”
Scotiabank, however, expects a dovish Fed Chair; “it seems improbable that the president would appoint someone who thinks that rates don’t need to fall any more than we already have priced in with the Powell Fed. For the dollar, that is likely to be a problem, and data suggests that investors continue to derisk their USD exposure.”
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TAGS: Pound Dollar Forecasts
