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12
03, 2026
Pound to Dollar Forecast: GBP Jumps to 10 Day Highs as Oil Prices Slide
– Written by
David Woodsmith
STORY LINK Pound to Dollar Forecast: GBP Jumps to 10 Day Highs as Oil Prices Slide
The Pound to Dollar exchange rate (GBP/USD) surged to 10-day highs above 1.3480 as a sharp correction in global oil prices improved risk sentiment and curbed safe-haven demand for the US dollar.
Sterling benefited from easing energy fears after comments from US President Donald Trump suggesting the Iran conflict could end soon, while a strong rally in UK government bonds also helped stabilise the Pound after recent volatility.
GBP/USD Forecasts: 10-Day High
After finding support below the 1.3300 on Monday, the Pound to Dollar (GBP/USD) exchange rate rallied to 10-day highs above 1.3480 on Tuesday before settling above 1.3450.
There is likely to be selling interest above 1.35 amid elevated uncertainty. According to UoB; “GBP has likely entered a range-trading phase, and it is likely to trade between 1.3325 and 1.3520.”
President Trump’s comments late on Monday that the Iran war would be over soon triggered a slide in oil prices while equity markets rallied strongly. This combination curbed demand for the dollar and also provided relief for the Pound in global markets.
There was also a significant rally in UK bonds with the 10-year gilt yield trading around 4.52% compared with highs above 4.70% on Monday which helped calm immediate fears.
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Middle East developments and energy prices will continue to be watched very closely. There will also be concerns over the domestic outlook given the risk that higher energy prices will undermine confidence and hit activity with a very high element of uncertainty.
According to ING; “What will matter most, though, is a reopening of the Strait of Hormuz and a restart of production across the Middle East. Until investors receive headlines on that score, presumably relating to some kind of ceasefire, we doubt the dollar is going to quickly hand back all the gains made over the last two weeks.”
It added; “For today, let’s see whether we hear of any further US measures to address the oil shock.
MUFG notes that the underlying outlook for energy supplies is a key factor; “The current scenario is that risks to facilities have halted or reduced production as has the inability to use the Strait of Hormuz. Once conditions allow, production can gradually ramp back up.
It added; “A scenario of supply destruction would be far worse in that the time taken for significant repairs would lengthen, potentially notably, the time to get production going again.”
National Australia Bank senior currency strategist Rodrigo Catril commented; “We’re cautious in the sense that it may not be as simple as just declaring the end of the war, our sense is that we haven’t seen the end of the volatility.”
Deutsche Bank noted that a sustained increase in oil prices, a shift in stance from central banks and evidence of economic weakness would trigger much more damage to risk appetite and a deeper slide in equities.
Chief economist Jack Meaning commented; “How close are we to meeting those thresholds? Much closer than a week ago. But on several metrics we aren’t quite there yet, which explains why equities aren’t yet seeing bear-market declines, like we saw in 2022.”
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TAGS: Pound Dollar Forecasts
