Exchange Rates UK Research’s latest April-May 2026 poll of major investment banks shows the pound-to-dollar exchange rate is expected to average around 1.33–1.34 in Q2 this year, below the current spot near 1.3576, with forecasts ranging widely from 1.27 on the downside to 1.40–1.45 on the upside over the longer term.

The data highlights a market where the central view points to limited near-term upside, but with a growing divergence in expectations beyond that.

Consensus suggests GBP/USD close to fair value after April rally

The clustering of pound sterling forecasts in the low-to-mid 1.30s suggests most banks believe GBP/USD is already trading near the upper end of its near-term range.

This follows a strong April performance, with the pair rising over 2% and briefly testing the mid-1.36s before losing momentum into early May.

Many institutions, including Goldman Sachs, ING and SEB, anchor their projections around these levels, reinforcing the idea of a broadly rangebound market.

Near-term expectations therefore point to sideways movement or a modest drift lower, rather than a sustained breakout higher.

Forecast split reflects rising macro uncertainty

While the average forecast is relatively stable, the range of projections is notably wide.

On the upside, banks such as RBC, Westpac and ABN AMRO see GBP/USD climbing back towards 1.40 and beyond over time.

On the downside, Citi and CIBC expect a move towards the high-1.20s, reflecting concerns about the UK outlook.

This divergence reflects an increasingly uncertain macro backdrop.

Geopolitical tensions, particularly the Iran conflict, have been a key driver, with shifts in oil prices and risk sentiment influencing demand for the US dollar as a safe haven.

At the same time, the Bank of England is balancing persistent inflation pressures against slowing growth, leaving policy finely poised and adding to currency volatility.

UK-specific risks are also building, with rising energy costs and weaker growth expectations weighing on sentiment towards sterling.

GBP/USD Outlook: stable average, but growing risk of a larger move

The latest Exchange Rates UK Research poll suggests GBP/USD is likely to remain anchored around the mid-1.30s in the near term.

However, the widening spread of forecasts indicates that this stability may not last.

With central bank policy, inflation dynamics and geopolitical risks all in flux, future moves are increasingly likely to be driven by external shocks.

For now, the consensus points to a steady range.

But the breadth of forecasts suggests the next decisive move, higher or lower, could be more significant than the average implies.