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David Woodsmith

STORY LINK British Pound to Dollar Forecast: GBP Steady with Fed Cut Odds Above 85%

The Pound to Dollar exchange rate (GBP/USD) hovered near 1.3200 as the dollar regained some ground and Sterling struggled to build momentum.

Markets remain heavily priced for a December Fed cut, with upcoming ADP and ISM data likely to shape expectations.

Medium-term projections still favour a softer dollar, though BoE easing could temper Pound Sterling gains.

GBP/USD Forecasts: Stall Above 1.32

The Pound to Dollar (GBP/USD) exchange rate tested support below 1.3200 on Tuesday before trading close to this level as the dollar recouped some ground while the Pound was unable to make headway.

ING expects renewed dollar losses; “We think the conditions for USD weakening persist after yesterday’s rollercoaster ride.”

JP Morgan forecasts GBP/USD gains to 1.37 by March as the dollar loses ground.

On a near-term view, markets are waiting for ADP jobs and ISM services-sector releases on Wednesday.

ING commented; “Yesterday’s ISM manufacturing didn’t move pricing for a December cut as expected: prices paid were a bit higher than expected, but the headline index print was soft. We expect that the remainder of the week will validate the market’s dovish pricing for next week’s Fed meeting.”

Markets are still pricing in over an 85% chance of a Fed rate cut next week.

According to ANZ head of G3 economics Brian Martin; “I really do think the Fed needs to cut interest rates, and not just cut rates in December, but follow through with further cuts next year.”

The medium-term Fed outlook will also be a key element for markets, especially with on-going speculation that Kevin Hassett will be nominated to be the next Fed Chair and act as a “shadow Chair” over the next few months.

Scotiabank noted that markets are reluctant to price in rates dipping below 3% and added; “It will be hard to persuade some policymakers of the merits of that argument in the near-term but leadership lobbying to lower the Fed funds target rate significantly without clear justification would raise concerns about political influence on the FOMC, representing a clear threat to USD stability.”

As far as the UK economy is concerned, the OECD has raised its 2026 forecast for GDP growth to 1.2% from 1% and sees growth of 1.3% in 2027.

The organisation is still wary over the risk of sticky inflation.

According to the OECD; “Elevated inflation expectations and potential second-round effects from increases in payroll taxes and the minimum wage, as well as from high food inflation, constitute an upside risk to prices.”

It called for the Bank of England (BoE) to maintain a cautious stance on rate cuts, but traders are pricing in around a 90% chance of a cut this month.

MUFG noted relatively hawkish comments from MPC member Greene on Monday, but added; “with only one additional member likely required to vote for cut to get a majority on the MPC, we still believe the BoE is on track to cut rates, and encourage a weaker pound heading into year end.”

According to Scotiabank; “The outlook for relative central bank policy remains supportive for the GBP, as we expect the BoE to ease less than the Fed.”

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TAGS: Pound Dollar Forecasts

Created on December 03, 2025

• The US dollar continues to firm against the yen, with volatility masking an underlying upward bias.
• A wide rate differential and supportive U.S. outlook keep buyers in control, making dips attractive while major support remains intact.

The US dollar rallied a bit against the Japanese yen during the trading session on Tuesday, as we continue to see this market trying to recover. Ultimately, I think we are probably in a timeframe of noisy volatility, and that noisy volatility will continue to be the overall theme, I think not only of this pair, but probably several others.

Looking back over the last several months, we have seen a lot of strength coming out of the US dollar, and sooner or later, there has to be a little bit of a pullback. And I think that’s all we are seeing here. Yes, the Federal Reserve has an interest rate decision next Wednesday, and it very well could be an interest rate cut. But the reality is, the interest rate differential between these two currencies will remain wide enough to drive a truck through.

Rate Differential Supports the Trend

And with that being the case, I just don’t see why you would get short of this market unless we get some type of financial meltdown. That being said, the first quarter of 2026 should be very strong for the US economy, from some of the leading indicators that I follow. And therefore, I think the US dollar will continue to strengthen against most currencies. I don’t necessarily think this is a scenario where it’s going to be straight up in the air, but I do recognize that there’s a very real world in which there is just a grind higher.

I think that ends up being the overall theme here, and with that, I remain a buyer of dips. I have no interest in shorting this market, nor would I even be concerned about the trend until we broke down below the 153 yen level, where the 50-day EMA and previous support and resistance show themselves.

Want to trade our USD/JPY forex analysis and predictions? Here’s a list of forex brokers in Japan to check out.

Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

Platinum price maintained its positive stability during yesterday’s trading above the $1,605.00 level, which currently serves as additional support. This reinforces the dominance of the previously suggested bullish trend as the price fluctuates near $1,640.00.

We emphasize the importance of the price accumulating additional bullish momentum, which would enable it to form strong upward waves, allowing it to break through the $1,695.00 level and then extend gains toward the next main target located near $1,745.00.

Expected trading range: between $1,620.00 and $1,695.00

Price forecast for today: Bullish

The pair remains affected by the dominance of a sideways inclination, as it continues to fluctuate repeatedly between the barrier near 181.70, while the 179.40 level forms strong support, reducing the likelihood of triggering a bearish attack. The conflicting signals from major technical indicators also support the continuation of this sideways behavior, leaving us waiting for the price to break one of the key levels to confirm the general direction of the upcoming trades.

We note that if the price succeeds in breaking the current barrier and holding above it, this will confirm its readiness to launch a strong bullish attack, beginning with gains that may start at 182.35 and 182.90, respectively. However, failure to break this barrier will force the pair into negative trading, with a chance of retreating again toward the support of the sideways trend.

Expected trading range for today: between 180.30 and 181.60

Price forecast for today: Sideways, as long as key levels remain intact.

US Services PMI Data to Spotlight the US Dollar

While Japan’s Services PMI data supported bets on a BoJ rate hike, US Services PMI data will likely influence the Fed’s post-December rate path.

Economists forecast the ISM Services PMI to fall from 52.4 in October to 52.1 in November. A sharper drop in the headline PMI would signal a loss of economic momentum, given that services account for around 80% of US GDP. However, traders should also consider employment and price trends. Slower sector activity, rising job cuts, and higher prices may revive stagflation jitters and challenge bets on post-December Fed rate cuts.

Rising stagflation risks and a hawkish BoJ rate path align with my short- to medium-term outlook for USD/JPY.

Crucially, there are no FOMC member speeches to influence sentiment, with the Fed Blackout Period in effect until December 11, limiting Fed-driven volatility.

According to the CME FedWatch Tool, the chances of a December cut stand at 89.2% on December 2, up from 86.4% on December 1. Meanwhile, the probability of a January rate cut edged up from 23.0% to 25.7%. Sentiment toward first-quarter rate cuts will be key, given that markets are expecting BoJ and Fed policy adjustments in December.

Technical Outlook: USD/JPY on a Downward Trajectory

Looking at the daily chart, USD/JPY traded above the 50-day and 200-day Exponential Moving Averages (EMAs), affirming a bullish bias. However, fundamentals have begun to shift from the technical trend, supporting a bearish outlook.

A drop below the 155 support level would open the door to testing the 50-day EMA. If breached, the 153 support level would be the next key support. Crucially, a break below the 50-day EMA would indicate a bearish trend reversal, suggesting a near-term fall toward 150.

Above: P.M. Keir Starmer defends his budget in a speech delivered Monday. Picture by Simon Dawson / No 10 Downing Street.

Post-Budget relief for British pound, but a wary eye on the local elections in May.

The pound to euro exchange rate’s (GBP/EUR) rally has scope to run further say analysts at Barclays, who judge “last week’s budget generates scope for an, at least partial, unwind of the pound’s fiscal risk premium.”

In a weekly analysis, the investment bank’s FX team say this upside potential derives from a larger headroom, residual net short positions, and a positive risk backdrop into December.

It adds that “a relatively warm reception” by the Labour party to the budget is important to consider, in that it allays near-term risks of political instability.

“The back-loading of fiscal tightening implies execution and credibility risks, but we think these are already adequately priced,” says Barclays.

The pound has fallen steadily against the euro through the course of 2025, with losses accelerating in the summer as markets prepared for a tough budget.

Above: GBP/EUR remains in a downtrend, with the post-budget bounce faltering.

Fears were elevated that political pressures on Chancellor Rachel Reeves and Prime Minister Keir Starmer would result in a market-unfriendly budget.

In particular, there were concerns that the debt market would not take kindly to any budget that failed to address the country’s growing deficit.

But some £26BN in tax rises over the coming years restores the Chancellor’s headroom by £22BN, which is a relief to markets, if not the increasingly despondent UK taxpayer.

GBP/EUR Year-End 2025

Built from leading bank forecasts.

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The Bank of England is another key consideration for financial markets and the pound.

“Terminal rate pricing of just under 3.5% for Bank Rate (including a 25bp cut in December) also remains appropriate, in our view, as the macro outlook over the Bank’s policy horizon is largely unchanged,” says Barclays.

A terminal rate of 3.5% implies two further cuts in the cycle.

Marrkets are fully priced for a cut in December, with another falling by April 2026.

“If anything, aggregate demand is supported on the margin and confidence could also rebound as Budget uncertainty clears, thereby reducing the dovish tail for the pound,” adds Barclays.

In all, analysts expect EUR/GBP to edge closer to the rate differential-implied level (which is c.0.86) in the near term.

In GBP/EUR terms, that is 1.1630.

Further out, the next key milestone is the local elections in May 2026.

“With the market unlikely to be forgiving of further signs of fiscal slippage, such as in relation to the benefits cuts last summer, policy stability is a precondition for a more lasting rebound in sterling,” says Barclays.

With Labour set for a wipeout in local elections, pressure to change leaders will grow, making the installment of a devout left wing leader and Chancellor a clear risk for sterling in the year ahead.

– Written by


Ben Hughes

STORY LINK GBP/USD Forecast: Pound Sterling Rangebound Ahead of Key Services Data

The Pound to Dollar exchange rate (GBP/USD) traded within a narrow band on Tuesday, supported by increasingly dovish expectations for the Federal Reserve.

At the time of writing, GBP/USD was trading around $1.3194, almost unchanged from its opening levels.

The US Dollar (USD) struggled for direction on Tuesday as markets ramped up bets on a December Fed rate cut.

Pricing now implies an 87% probability of a 25bps reduction next week, with investors increasingly convinced the Fed will need to ease policy again as signs of cooling demand accumulate.

Dovish positioning was reinforced by reports that President Donald Trump may soon nominate Kevin Hassett — his top White House economic adviser — to replace Jerome Powell as Fed Chair when Powell’s term ends in May.

Hassett is widely viewed as favouring more aggressive interest rate cuts, fuelling speculation that the Fed’s easing cycle could accelerate in 2025 if he is confirmed.

These developments kept the US Dollar’s upside firmly capped, even as a modest pullback in risk appetite offered some limited support.

The Pound (GBP) lacked momentum on Tuesday, drifting in directionless trade amid a clear absence of UK economic catalysts.

With no major data releases to materially influence sentiment on the UK’s growth outlook or the Bank of England’s (BoE) next policy move, traders kept GBP positioning light.

Lingering uncertainty over the UK’s economic trajectory — and whether the BoE will deliver another rate cut in December — also contributed to Sterling’s subdued tone.

GBP/USD Forecast: Slowdown in US Services PMI to Drag on the Dollar?

Looking ahead to midweek trade, movement in the Pound to US Dollar exchange rate is likely to be driven by the latest ISM services PMI.

Following October’s strong rebound, November’s index is expected to show a cooldown in activity. A downside surprise — mirroring Monday’s weaker ISM manufacturing reading — could weigh heavily on the US Dollar by reinforcing expectations for further Fed easing.

In the UK, the final services PMI is expected to confirm a sharp slowdown in November as businesses paused hiring and investment decisions ahead of Chancellor Rachel Reeves’s autumn budget. This may keep the Pound contained even if USD sentiment softens.

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TAGS: Pound Dollar Forecasts