– Written by
Frank Davies
STORY LINK GBP/USD Price Forecast: Pound Sterling Firms After Fed Minutes
The Pound US Dollar (GBP/USD) exchange rate was rangebound on Thursday morning after falling to its lowest level in roughly three weeks during the previous session.
At the time of writing, GBP/USD was trading close to $1.3486, showing minimal movement from Thursday’s opening levels.
The US Dollar traded unevenly through Thursday’s European session as investors continued analysing the minutes from the Federal Reserve’s latest policy meeting.
Initially, the publication lent support to the ‘Greenback’, revealing broad agreement among policymakers to keep interest rates unchanged while also indicating that some officials remain open to further tightening should inflationary pressures persist.
However, enthusiasm for the US currency faded as upon further reading the minutes suggested US authorities reviewed exchange rate movements earlier in the year, fuelling speculation that policymakers may be more comfortable with a softer Dollar if required to support economic conditions.
The Pound lacked clear direction as domestic political concerns continued to weigh on market sentiment.
Renewed scrutiny surrounding Prime Minister Keir Starmer followed another policy reversal regarding delays to local elections, adding to doubts about the government’s stability ahead of the upcoming Gorton and Denton by-election.
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At the same time, expectations that the Bank of England could soon begin loosening monetary policy continued to cap Sterling demand. Recent UK employment and inflation releases have strengthened market conviction that a rate cut as soon as March remains likely.
GBP/USD Forecast: Growth Data and UK Activity Surveys in Focus
Volatility in the Pound to US Dollar (GBP/USD) exchange rate may increase toward the end of the week with several key economic releases scheduled on both sides of the Atlantic.
Markets will closely watch the latest US GDP estimate for the final quarter of 2025, which is forecast to show growth cooling following the disruption caused by the extended government shutdown. A stronger-than-expected reading, however, could provide renewed support for the US Dollar, given the resilience previously shown by the US economy.
Meanwhile, upcoming UK PMI surveys are expected to indicate slower expansion within the services sector, while retail sales growth is also projected to weaken. Should these forecasts materialise, Sterling may face additional downside pressure heading into the weekend.
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TAGS: Pound Dollar Forecasts
