Modified: Tuesday, 25 November 2025 22:05 BST

– Written by


Frank Davies

STORY LINK GBP to USD Forecast: Pound Sterling Nears Weekly High on Dovish Fed Signals

The Pound-to-Dollar exchange rate (GBP/USD) edged toward a one-week high on Tuesday, supported by renewed speculation that the Federal Reserve could cut interest rates again in December.

At the time of writing, GBP/USD was trading around $1.3153, up almost 0.4% from Tuesday’s opening levels.

The US Dollar (USD) lost traction on Tuesday amid rising expectations for a December Fed rate cut, with the probability climbing to around 85%.

This marked a significant reversal from the end of last week, when hawkish Federal Reserve minutes pushed the chances of a cut down to just 25%.

The shift in sentiment followed the latest US retail sales report, which showed September’s growth slowing to its weakest pace since May.

Further downward pressure came from Fed policymaker Stephen Miran, who suggested the US economy is “calling for large interest rate cuts,” reinforcing the increasingly dovish tone in markets.

The Pound (GBP) remained muted on Tuesday as investors adopted a cautious stance ahead of Chancellor Rachel Reeves’s first autumn budget, set to be unveiled on Wednesday.

Reeves is expected to detail measures to close an estimated £20bn fiscal gap and potentially expand fiscal space compared to last year’s limited headroom.

With income tax rises effectively ruled out, analysts widely expect a patchwork of smaller tax increases and targeted spending reductions — an approach that has stirred concerns over the potential impact on household finances and business investment.

At the same time, markets continue to weigh how these fiscal plans may influence upcoming Bank of England (BoE) decisions, with considerable speculation that policymakers could deliver another rate cut in December.

GBP/USD Forecast: All Eyes on UK Budget

Looking ahead, Wednesday’s budget announcement is likely to dominate movement in the Pound US Dollar exchange rate.

Should Reeves unveil a package that raises concerns over economic growth or appears to increase pressure on the BoE to accelerate its cutting cycle, the Pound could face renewed losses.

Conversely, a budget seen as balanced, credible, and supportive of long-term stability may offer Sterling a lift after several turbulent weeks.

Meanwhile, USD investors will be watching the latest US durable goods orders data, with expectations that a slowdown in orders could place fresh pressure on the Dollar and deepen support for Fed rate-cut speculation

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TAGS: Pound Dollar Forecasts