– Written by


David Woodsmith

STORY LINK Pound to Dollar Forecast: GBP Sub 1.33 on FED Powell Warning

The Pound to Dollar exchange rate (GBP/USD) held below 1.33, trading near 1.3289 as markets reacted to Wednesday’s key Federal Reserve meeting.

A modest retreat in oil prices has eased pressure on Sterling, but with central bank guidance and energy risks still in focus, traders remain wary of renewed dollar strength.

GBP/USD Forecasts: Held Below 1.34

The Pound to Dollar (GBP/USD) exchange rate maintained a firm tone on Tuesday and hit highs at 1.3375 in Asia on Wednesday before settling close to 1.3350.

The dollar has lost some ground in global markets as oil prices edged lower and overall risk conditions held steady ahead of key central bank rate calls.

GBP/USD will need to move above 1.34 to potentially break out of the downtrend seen from above 1.3850 in late January.

According to UoB; “The slight increase in momentum suggests GBP could edge higher to 1.3410. Based on the current momentum, a clear break above this level appears unlikely.

It added; “To sustain the mild momentum, GBP must hold above 1.3270.”

Although market conditions are calmer, there is still the risk of rapid and substantial moves.

Central bank developments will also be a key element over the next 36 hours. The Federal Reserve will announce its interest rate decision on Wednesday, with rates expected to be held at 3.75%, while the Bank of England will release its decision on Thursday.

The Fed committee members will also release their updated forecasts or “dot plots” of interest rates. At the December update, the median projection was for one cut during 2026.

ING commented; “The Fed will keep rates on hold, but the risks are clearly of a hawkish revision in the Dot Plot projections, with the median currently signalling one rate cut by year-end. The dollar should benefit from a revision to no cuts in 2026.”

MUFG took a different stance; “The obvious statement he will make is that the longer the conflict lasts the greater the upside risks to energy prices and hence inflation will be. We therefore do not expect the FOMC to alter the median dot profile which in December revealed a profile of one rate cut in 2026 and one in 2027.”

The statement and comments from Chair Powell will also be watched closely. ING did add; “In terms of dovish risks, reintroducing “downside risks” mentioned in the statement’s section about jobs could help markets maintain expectations for a cut on a dual-mandate rationale.”

Central banks will also be uneasy over inflation implications if energy prices remain elevated.

In this context, Danske Bank still sees scope for renewed dollar gains; “irrespective of one’s view on what global central banks should do to address the energy shock, markets are increasingly pricing in a scenario where central banks will tighten financial conditions relative to the pre-war scenario. All else being equal, a stronger USD plays a key role in tightening global financial conditions.”

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The EURJPY repeated attempts to form bullish waves due to providing positive momentum by the main indicators in the last period, to move away from the support at 182.00 and recording some gains by reaching 183.55.

We couldn’t confirm regaining the bullish bias unless breaching the barrier at 184.40 level and holding above it, therefore, we expect forming unstable mixed trading, to keep waiting for surpassing the main levels to confirm the main trend in the upcoming period.

The expected trading range for today is between 182.55 and 184.00

Trend forecast: Fluctuating within the bearish track

– Written by


David Woodsmith

STORY LINK GBP/USD Forecast: Pound Sterling Steady Ahead of Fed Decision

The Pound to US Dollar (GBP/USD) exchange rate moved little on Wednesday, with traders opting for caution ahead of the Federal Reserve’s upcoming interest rate decision.

At the time of writing, GBP/USD hovered around $1.3358, showing minimal movement from the start of the session.

The US Dollar remained confined to a tight range during European trading hours, as investors held back from making significant moves ahead of the Federal Reserve’s latest policy announcement.

Although no changes to interest rates are expected, attention is firmly on the Fed’s guidance and remarks from Chair Jerome Powell for clues on the direction of future monetary policy.

Markets are particularly focused on how policymakers interpret the inflationary impact of the ongoing tensions in the Middle East, which have pushed global energy prices sharply higher in recent weeks.

Fears that inflation could remain elevated for longer have already led some analysts to delay their expectations for when the Federal Reserve might begin easing policy.

Should the Fed signal a later timeline for rate cuts, or even hint at further tightening, the US Dollar could jump.

The Pound was largely stable, as a modest decline in energy prices offered some respite to UK bond markets.

Government borrowing costs edged lower, with two-year yields slipping as falling oil prices helped ease some of the immediate inflationary pressure on the UK economy.

At the same time, investors remained cautious toward Sterling, refraining from placing strong directional bets ahead of the Bank of England’s own policy decision.

Short-Term GBP/USD Forecast: BoE Guidance in Focus

Attention will shift to the Bank of England’s interest rate announcement, which is expected to be the next major driver for the Pound to US Dollar exchange rate.

As with the Federal Reserve, policymakers are not expected to alter rates at this meeting, leaving forward guidance as the key area of interest. Any indication that rates may need to rise again to counter inflation could provide support for the Pound.

For the US Dollar, geopolitical developments will remain important, with any escalation in the Middle East likely to revive demand for safe-haven assets.

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TAGS: Pound Dollar Forecasts