Pound Sterling to Dollar Forecast: GBP Could Extend Rally if Dollar Slide Deepens
– Written by
Tim Boyer
STORY LINK Pound Sterling to Dollar Forecast: GBP Could Extend Rally if Dollar Slide Deepens
The latest Pound to Dollar (GBP/USD) forecast turned more upbeat after Sterling rebounded from 1.3420 lows and pushed back above 1.3500 towards the end of the week.
US Dollar weakness continues to dominate as political pressure on the Federal Reserve unsettles markets, leaving GBP/USD poised against key resistance near 1.3575.
GBP/USD Forecasts: Break Above 1.3500
The Pound to Dollar exchange rate (GBP/USD) rebounded strongly from lows around 1.3420 on Wednesday and continued to make ground on Thursday as it edged above the 1.3500 level.
Unease over the politicising of the Fed is damaging the dollar with no major Pound developments.
Crucial resistance comes in the 1.3575-90 range with the pair failing in this area during July and August.
According to UoB progress will be limited; “The major resistance at 1.3575 is unlikely to come into view.”
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Federal Reserve policy and Administration efforts to exert much greater influence on the central bank remain key elements for the dollar and global markets.
ING expects the political dimension to increase further and noted; “It is hard to see the debate not falling across partisan lines, with some of the most excoriating criticism of the White House action coming from the likes of former Fed and Treasury representatives Janet Yellen and Lael Brainard – both Democrats.
Fed Governor Cook is not accepting her attempted dismissal by President Trump with a legal challenge.
ING added; “The Cook issue looks set to be tied up in court for the remainder of the year, with the key point being whether she can continue to vote on the FOMC during this period. Alongside Stephen Miran’s recent appointment to the Fed governing board, 17 September is shaping up to be quite a meeting.”
The battle has also widened to regional Fed banks.
Jeffries stated that the battle over Cook; “exemplifies the expansion of executive power, which may open the path for the administration to oust Powell or other regional Fed presidents, raising risk for U.S. assets.”
It added; “The risk of non-renewal or dismissal of regional presidents — especially those perceived as policy dissenters — has become material.”
Investment banks will continue to discuss the longer-term outlook for interest rates.
Rabobank commented; “This week’s events underline our view that the FOMC may continue to resist delivering the amount of rate cuts that President Trump desires this year.”
Nevertheless, it expects a different environment in 2026; “next year the data are likely to matter less in monetary policy decisions and we expect the pace of the cutting cycle to pick up.”
It added; “What’s more, as we discussed in our Jackson Hole comment, we are likely see a major overhaul of the Fed. Stephen Miran is not going to the Fed just to vote for rate cuts, more importantly he is sent there by Trump as a quartermaster for the MAGA makeover.”
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TAGS: Pound Dollar Forecasts
