Modified: Thursday, 8 January 2026 13:16 BST

– Written by


Ben Hughes

STORY LINK Pound Sterling to Dollar Forecast: Can GBP Break Higher as USD Backing Fades?

The Pound to US Dollar exchange rate (GBP/USD) remained capped below 1.35 as signs of fragility in the US labour market offset lingering caution over global risk conditions.

With momentum slowing, traders are watching whether support can hold above the mid-1.34s.

GBP/USD Forecasts: Hold Near 1.35

The Pound to Dollar (GBP/USD) exchange rate has been held in tight ranges and traded just below 1.35 after the New York open. Tough resistance remains above 1.3550.

According to Scotiabank, the trend is bullish, but momentum has faded; “We note the importance of the 200 day MA at 1.3388, and we look to a near-term range roughly bound between 1.3450 and 1.3550.

UoB added; “Upward momentum has slowed with the pullback, and today, we expect GBP to range-trade, most likely between 1.3470 and 1.3535.”

Equity markets were less confident on Wednesday with limited pullbacks and the tone surrounding risk appetite was slightly less confident.

There is scope for increased volatility given geo-political tensions and important US data releases.

According to Scotiabank; “Calm, low volatility trading risks getting a shake up over the coming days.”

US ADP jobs data recorded an increase in private payrolls of 41,000 for December, slightly below consensus forecasts of around 50,000 and followed a revised 29,000 decline for November.

ADP chief economist Dr. Nela Richardson commented; “Small establishments recovered from November job losses with positive end-of-year hiring, even as large employers pulled back.”

Elsewhere, the JOLTS data recorded a decline in job openings to 7.15mn for November from 7.45mn previously and below consensus forecasts of 7.60mn.

There was, however, a stronger than expected reading for the ISM services-sector index.

Overall, markets are still not expecting the Federal Reserve to cut rates again in January, although traders are still on alert for an announcement on the next Fed Chair.

ING commented; “Beyond today, our short-term view remains neutral to slightly bullish on the greenback.”

Geo-political developments will be watched closely with Venezuela and Greenland both important areas.

Macquarie Group global forex and rates strategist Thierry Wizman commented; “Traders seem to be okay with the rhetoric coming from the U.S. when it does not imply that ‘boots on the ground’ will be needed to run Venezuela.”

He added; “A military invasion and a prolonged on-the-ground conflict would have risked a major dollar depreciation, as did the Iraq and Afghanistan wars in 2002-2008,

There has also been speculation that the Supreme Court could announce a decision on US reciprocal tariffs on Friday when it will hold an opinion day.

If there is a decision, MUFG commented; “We lean toward the Supreme Court striking down the use of IEEPA which will trigger a bout of uncertainty for US companies once again.

The bank expects there are plans to expand other tariffs if necessary.

According to the bank; “It’s unlikely that Plan B will be as all-encompassing and hence tariff revenue expectations would likely be downgraded, potentially steepening the US Treasury yield curve and potentially weakening the dollar. In any case, it adds renewed uncertainties for US companies that would be unhelpful for corporate sentiment.”

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TAGS: Pound Dollar Forecasts