– Written by
Ben Hughes
STORY LINK GBP/USD Forecast: Pound Sterling Resilient as Markets Turn Risk-Positive
The Pound to US Dollar exchange rate (GBP/USD) edged higher on Thursday, brushing aside disappointing UK growth figures as improving global risk appetite weighed on the safe-haven US Dollar.
At the time of writing, GBP/USD was trading around $1.3644, roughly 0.2% higher on the day.
Sterling managed to hold its ground despite the release of softer-than-expected UK GDP data.
Figures showed the British economy expanded by just 0.1% in the fourth quarter of 2025, matching the previous quarter’s sluggish pace but falling short of expectations for a 0.2% increase.
The underwhelming reading reinforced speculation that the Bank of England may need to cut interest rates to support growth, particularly after Deputy Governor Sarah Breeden signalled ongoing concerns around economic momentum.
However, the Pound proved resilient. Some investors appeared willing to look beyond the weak headline figure, with expectations that activity could gradually strengthen through 2026 helping to cushion Sterling from sharper losses.
The US Dollar softened as markets adopted a more risk-positive tone.
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Improving sentiment reduced demand for defensive assets, leading the ‘Greenback’ to surrender part of Wednesday’s post-payroll gains.
That said, the currency’s downside was limited by the lingering impact of the stronger-than-expected US non-farm payrolls report earlier in the week, which has tempered expectations of imminent Federal Reserve rate cuts.
GBP/USD Forecast: US Inflation Data in the Spotlight
Attention now turns to Friday’s US consumer price index release.
Headline inflation is forecast to ease from 2.7% to 2.5% in January, while core inflation is also expected to edge lower to 2.5%.
A softer-than-expected reading could revive bets on Federal Reserve easing and weigh on the Dollar.
Conversely, any upside surprise may reinforce the recent repricing in rate expectations and limit GBP/USD gains.
With the UK calendar light, Sterling is likely to remain sensitive to broader risk sentiment and political developments at home.
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TAGS: Pound Dollar Forecasts
