Modified: Monday, 27 April 2026 08:01 BST

– Written by


Frank Davies

STORY LINK Pound to Dollar Week Ahead Forecast: Bank of England in Focus as GBP Struggles

The Pound to Dollar exchange rate (GBP/USD) has drifted around 1.3500, with markets cautious ahead of the upcoming Bank of England policy update and ongoing uncertainty surrounding energy prices and UK politics.

While stronger UK data has offered some support, rising cost pressures, leadership risks, and expectations that the Bank of England may hold rates are limiting Sterling’s upside.

GBP/USD Forecasts: BoE update due

ING forecasts that the Pound to Dollar (GBP/USD) exchange rate will edge lower to 1.33 at the end of 2026 before a slight gain to 1.36 at the end of next year.

GBP/USD drifted lower during the week to trade around 1.35 amid further uncertainty surrounding the Iran situation and mixed UK fundamentals.

Energy prices will remain a key short-term element. Matsui Securities commented; “Oil and the dollar are still moving pretty closely together, and with crude creeping back up, I’d say the dollar is still staying fairly firm.”

There were further political concerns during the week as the Mandelson scandal continued.

ING commented; “the risk of a leadership change in Downing Street is growing. Markets are wary that a new prime minister – and, by extension, chancellor – might mean more borrowing and looser fiscal rules.

The headline UK PMI business confidence data was stronger than expected, but business confidence dipped to the lowest level since 2022 and there was a very sharp increase in cost pressures and prices.

The Bank of England remains in a very difficult position. Following the data, markets priced in a 75% chance of a rate hike by June.

ING discussed the April 30th BoE decision; “in short, we’d expect the Bank to keep its options open. Avoid doing anything that could add to rate hike bets in markets, but without trying to actively talk them down, either.

It added; “Ultimately, though, we don’t think the Bank will hike rates this year – not at the current level of energy prices. We expect rates to stay at 3.75% in April and June, and for the rest of 2026.”

Bank of America also remains cautious over the UK outlook; “Despite a much better unemployment reading, underlying weakness persists. And the unfolding energy shock will also revive fears of higher unemployment in the near-term.

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TAGS: Pound Dollar Forecasts