Modified: Wednesday, 8 July 2026 16:01 BST

– Written by


David Woodsmith

STORY LINK Pound Sterling to Dollar Forecast: GBP Hits 20-Day High as USD Rally Pauses

The Pound to Dollar exchange rate (GBP/USD) climbed to a 20-day high above 1.3400 as calm market conditions and subdued volatility encouraged demand for higher-yielding currencies.

With the Dollar consolidating after its recent rally and Sterling continuing to benefit from easing UK political uncertainty, investors have become more willing to rebuild long Pound positions.

GBP/USD Forecasts: 20-Day High

The Pound to Dollar (GBP/USD) exchange rate posted a 20-day high fractionally above the 1.34 level before trading around 1.3385.

Overall risk appetite held steady while overall volatility remained low. In this environment, the relatively high yields offered by the Dollar and Pound provided net support to both currencies.

UOB noted strong resistance close just above 1.34 and commented; “A break above this major resistance is not ruled out, but based on the prevailing momentum, the next resistance at 1.3445 is likely out of reach. To sustain the momentum, GBP must hold above 1.3350.”

According to Scotiabank; “momentum appears to be pushing further into bullish territory.”

It added; “The daily chart offers dense resistance at several levels (1.3420, 1.3450. 1.3500, 1.3520) ahead of 1.3600.”

After hitting 13-month highs near 101.50 last week, the dollar index was steady around 100.60.

Minutes from June’s Federal Reserve policy meeting will be released on Wednesday. Interest rates were held at 3.75% with relatively hawkish comments from new Chair Warsh.

ING commented; “markets probably require a convincing narrative to short the high-yielding dollar in such a favourable environment for carry. Unless the minutes surprise on the dovish side (we don’t think so), that narrative should not emerge this week, and DXY can stay closer to 101.0 than 100.0.”

Scotiabank is less convinced over the dollar outlook; “we continue to think that near-term risks are tilted towards a little more USD weakness overall; we think the markets are mispricing Fed tightening risks—certainly over the next few months—and we believe dollar index gains may be showing signs of peaking on the charts which may see the index put a little more pressure on support around the 100.5 point.”

DBS Bank noted; “the US dollar has strengthened in response to a hawkish market interpretation of the first US Fed meeting under new Chair Kevin Warsh in June.”

It added; “That said, the USD’s appeal continues to be challenged by investor concerns over US exceptionalism, long-term fiscal sustainability, and ongoing policy uncertainties.”

Domestically, assuming Burnham is confirmed as new Prime Minister, markets will be looking closely at the appointment of the next Chancellor and overall direction of fiscal policy.

According to Scotiabank; “In terms of fiscal risks, the UK’s OBR (Office for Budget Responsibility) has underscored the challenges facing the UK and specifically the cost (£100bn) of stabilizing the national debt around current levels (95% of GDP).”

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TAGS: Pound Dollar Forecasts