Modified: Wednesday, 26 August 2026 20:16 BST

– Written by


Frank Davies

STORY LINK GBP/USD Forecast: Higher UK Energy Bills Weigh on Pound Rates

The Pound US Dollar (GBP/USD) exchange rate weakened on Wednesday as investors assessed the latest batch of US economic data.

At the time of writing, GBP/USD was trading at around $1.3605, down roughly 0.3% from Wednesday’s opening levels.

The US Dollar (USD) gained ground against most of its major counterparts on Wednesday after the release of the latest US core PCE price index.

The Federal Reserve’s preferred gauge of underlying inflation showed price growth remained unchanged at 3.3% in July, leaving it close to the two-year high of 3.4% recorded in May.

The lack of further progress in bringing inflation towards the Fed’s 2% target encouraged investors to increase their expectations for additional monetary tightening later this year, providing a boost to the ‘Greenback’.

The US Dollar also benefited from stronger-than-anticipated durable goods orders, with the latest figures showing a significantly larger increase in demand than economists had forecast.

The Pound (GBP) struggled on Wednesday as the announcement of a 4% increase in the UK’s energy price cap renewed concerns over pressure on household finances.

Although the rise had been largely expected after sustained disruption to energy supplies in the Gulf, investors remained wary that higher household bills could weigh on consumer spending and undermine the UK’s economic recovery.

There are also concerns that rising utility costs could feed through into inflation, creating another headache for the Bank of England (BoE) and potentially strengthening the case for further interest rate increases before the end of the year.

Near-Term GBP/USD Forecast: Fed Chair to Take Centre Stage at Jackson Hole

Looking towards the remainder of the week, attention will turn firmly to the Federal Reserve’s annual Jackson Hole symposium and any clues it may provide over the bank’s future policy direction.

New Fed Chair Kevin Warsh has so far favoured limiting forward guidance from the central bank. However, persistent inflation and renewed volatility in US bond markets could encourage him to offer greater insight into the Fed’s plans.

Investors may therefore remain cautious ahead of Warsh’s speech on Friday, potentially keeping the Pound to US Dollar (GBP/USD) exchange rate relatively subdued.

With the UK economic calendar offering little of note in the meantime, Sterling is likely to take its direction from broader currency market trends on Thursday.

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