Modified: Wednesday, 19 November 2025 21:00 BST

– Written by


Frank Davies

STORY LINK GBP/USD Forecast: Pound Sterling Risks $1.30 as Markets Turn Cautious

The Pound to US Dollar exchange rate (GBP/USD) drifted lower on Wednesday as investors erred on the side of caution, boosting appetite for the safe-haven US Dollar.

At the time of writing, GBP/USD was trading near $1.3116, roughly 0.2% down from the day’s opening levels.

The US Dollar (USD) firmed on Wednesday as worries over a possible stock market pullback encouraged investors to rotate into safer assets.

Nerves were particularly heightened ahead of Nvidia’s third-quarter earnings release — a report widely viewed as a barometer for broader tech-sector momentum. A disappointing result could revive fears of overstretched valuations.

Additional support for the US Dollar came as markets waited for the publication of the Federal Reserve’s October meeting minutes.

USD traders broadly expect the minutes to reinforce the hawkish message delivered recently by Fed Chair Jerome Powell, further reducing the likelihood of a rate cut in December.

The Pound (GBP) lost ground on Wednesday after fresh inflation data strengthened expectations that the Bank of England will cut interest rates next month.

Figures from the Office for National Statistics showed headline inflation slipping from 3.8% to 3.6% in October, while core inflation eased from 3.5% to 3.4%.

The cooling in price pressures, driven largely by a steep year-on-year decline in energy costs, aligned with market forecasts and marked the first drop in inflation since May.

In response, investors ramped up bets on another 25bps BoE rate cut in December, with markets expecting the dovish bloc on the Monetary Policy Committee to win out as economic momentum continues to sag.

However, the data wasn’t entirely negative for Sterling. The easing of inflation pushed gilt yields lower, potentially giving Chancellor Rachel Reeves some additional fiscal flexibility when she delivers next week’s autumn budget.

GBP/USD Exchange Rate Forecast: Soft US Payrolls to Sink the US Dollar?

Looking ahead to Thursday, all eyes will be on the delayed release of September’s US non-farm payrolls.

Economists expect the data, postponed for nearly two months by the US government shutdown, to show 50,000 new jobs were created, up from August’s subdued 22,000 print.

Even with this improvement, the figures would still point toward a cooling labour market. Any signs of softening could weigh on the US Dollar if they encourage traders to reassess the prospect of a Fed rate cut later in the year.

Meanwhile, lingering uncertainty surrounding the UK’s autumn budget is likely to keep the Pound under pressure through the session.

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TAGS: Pound Dollar Forecasts