Modified: Tuesday, 9 June 2026 15:11 BST

– Written by


David Woodsmith

STORY LINK Pound-to-Dollar Forecast: Triple Dollar Boost Pushes GBP to 3-Week Lows

The Pound to Dollar exchange rate (GBP/USD) fell to fresh three-week lows as a powerful combination of rising geopolitical tensions, weaker investor risk appetite and growing expectations of higher US interest rates boosted demand for the US Dollar.

With markets increasingly pricing in the possibility of Federal Reserve rate hikes later this year, Sterling remains under pressure despite showing signs of resilience around the key 1.3300 support level.

GBP/USD Forecasts: Slides to 3-Week Lows

The Pound to Dollar (GBP/USD) exchange rate dipped to 3-week lows just above 1.3300 on Monday before looking to stabilise.

The Pound was still relatively resilient given the underlying conditions, but the dollar benefitted from renewed ge-political concerns, weaker risk conditions and expectations of higher US interest rates. The dollar index was close to 2-month highs.

GBP/USD survived a test of 1.33 in May, but any slide through this area could trigger losses to 1.3160.

UoB commented; “A break below this level is not ruled out, but deeply oversold conditions suggest GBP might not be able to maintain a foothold below this level.”

Middle East tensions increased again on Monday following Israeli attacks on Iran in retaliation for Iranian missile launches against Israel and oil prices secured renewed gains.

ING commented; “The geopolitical backdrop is also shifting dollar-positive, with most surprised that Brent is not trading even higher now that Iran and Israel are directly exchanging fire.”

Equity markets registered sharp losses on Friday and the mood remained defensive on Monday while US bond yields moved higher. According to ING; “An unwind of risk assets and especially an unwind of emerging market positions is normally dollar-positive.”

As far as the US economy is concerned, the latest jobs report was stronger than expected with an increase in non-farm payrolls of 172,000 for may compared with consensus forecasts of around 85,000 while the April increase was revised higher to 179,000 from the 115,000 reported previously.

MUFG commented; “Stronger employment growth alongside upside risks to the inflation outlook from the energy price shock in the Middle East has encouraged market participants to price in multiple rate hikes from the Fed in the year ahead.”

ING looked at the important US inflation indicators this week; “At some point, that expected tightening will be too aggressive, but we cannot see that story being unwound this week. This is because it is another week for US price data, where the May headline CPI reading is expected to push through 4% year-on-year, and PPI final demand should remain near 6% YoY.”

Capital Economics chief markets economist Jonas Goltermann also expects higher US rates; “The U.S. payrolls report paints a picture of a U.S. labour market that is strengthening despite the ongoing energy price shock.”

He added; “That combination makes policy tightening by the Fed later this year increasingly probable. We now expect the FOMC to deliver two 25 basis-point rate hikes later this year, in response to the energy supply shock and the re-acceleration of the U.S. labour market.”

Like this piece? Please share with your friends and colleagues:

International Money Transfer? Ask our resident FX expert a money transfer question or try John’s new, free, no-obligation personal service! ,where he helps every step of the way,
ensuring you get the best exchange rates on your currency requirements.

TAGS: Pound Dollar Forecasts