Author, Andrew Gibson
After the latest UK Budget announcement, I’m taking a new look at the Pound to Dollar forecast for the rest of 2025 and into early 2026. Here’s my updated take on where GBP/USD is heading and the key forces now shaping the rate.
How has the Pound been doing against the US Dollar?
The Pound to Dollar exchange rate hit a multi-month low against the US Dollar in the first week of November.
Sterling recovered slightly mid-month.
However, this improvement was short-lived as investors worried about how the Pound might be affected by the upcoming UK Budget Statement.
How did the UK Budget affect the Pound to Dollar rate?
Sterling lost ground against the Dollar in the immediate aftermath of Rachel Reeves’ Budget Statement on Tuesday 26th November.
Pressure on the Pound was triggered by concerns from investors over the effect that an increased UK tax-take might have on the domestic economy.
The move lower saw GBP to USD drop to just above $1.31.
The Pound to Dollar exchange rate had recovered to $1.33 by early Thursday.
The shift into Sterling was partly triggered by the release of GDP Growth Forecasts from the Office for Budget Responsibility (OBR).
These were (accidentally) published just before Reeves’ Budget Statement and showed a healthy upgrade in UK growth forecast for 2025 from 1.0% to 1.5%.
However, the move higher for the Pound was tempered by a downgrade to the OBR’s growth projections for 2026, 2027, 2028 and 2029.
By the end of last week, the market’s opinion on Reeves’ Budget was clear.
The interest rates paid by the UK government on its debt was significantly lower than it had been on Monday.
Demand for UK Gilts had strengthened post-Budget and the markets were convinced by Reeve’s plans for taxation and spending.
What is Driving the US Dollar Performance?
Futures markets are currently pricing-in an 85% likelihood that US interest rates will be cut before Christmas.
This set-up means that a cut will not hurt the Dollar too much.
On the other hand, a decision to keep rates on hold from the US central bank will provide the Dollar with a major boost.
Near-term Pound to Dollar exchange rate forecast
I forecast that the Pound to Dollar exchange rate will improve to $1.35 in the near-term.
Factors that could cause this forecast to be amended include a pop in the AI Bubble.
This would send shares lower and trigger safe-have support for the Dollar.
Any suggestion from the Bank of England that UK interest rates will stay higher-for-longer will support the Pound, sending GBP/USD even higher.
The currency market exchange rates change second-by-second.
Exchange rate forecasts change just as quickly, but don’t worry, there’s an expert at the end of the phone who can help.
As part of our money transfer service, we keep our clients up-to-date with the latest exchange rate trends and opportunities.
Why not request a quote below and see if we can help?
Is it a good time to buy USD with GBP?
An easy way to tell whether it’s a good or bad time to buy US Dollars is to look at its recent trading history.
Based on the GBP/USD rate over the past 2 years, 5 years or even 10 years, the current GBP to USD exchange rate is well above its average and therefore it’s a favourable time for buyers of US Dollars.
Buyers of US Dollars benefit from a higher GBP/USD exchange rate.
As always it depends on what period you are looking at. Over a longer timeframe, such as 5 years, the Pound to Dollar exchange rate is currently near the middle of its trading range.
Over the past 5 years:
The high in the GBP/USD rate was $1.4328
The low in the GBP/USD rate was $1.0697
Often it takes a major event to push the Pound to Dollar exchange rate to extreme levels.
In the absence of any significant news, the exchange rate tends to fluctuate far less. This is an important consideration if you are trying to decide when to exchange your money.
If you need to transfer money to the USA, we have written a helpful article explaining how to transfer Pounds to US Dollars.
GBP to USD Forecast Poll (1 week, 1 month, 1 quarter)
There are countless methods and models used to forecast GBP/USD rates.
A simple way to see what the overall consensus is among analysts.
While it’s hard to predict exchange rates to an exact number, it doesn’t stop people from trying.
FX Street provide a comprehensive poll of GBP/USD forecasts.
It lists the views of 13 analysts over 1 week, 1 month and 1 quarter timeframes.
To make things easy, there is a graph at the top of the page that summarises the consensus view.
Pick a period that suits you.
You can then see if there is a Bullish or Bearish bias overall.
A bullish bias means analysts are forecasting the Pound will rise against the US Dollar. Conversely, a bearish bias indicates the Pound is expected to fall.
Don’t be concerned by the fact that there is plenty of disagreement among analysts. That’s normal.
The point of forecasting is never to reach certainty.
You only ever have certainty in hindsight.
Forecasting is about probability rather than precision.
GBP to USD Forecast Weekly (my short-term approach)
A timeframe of only 1 week warrants a different approach to someone looking at longer time horizons.
Over 1 week, there’s only a small amount of economic news that will take place.
An economic calendar can help you with this.
I would recommend using the DailyFX economic calendar as a source of upcoming news and events.
I prefer the DailyFX calendar because it shows the impact each number is expected to make (low, medium or high).
My approach is to focus only on the high-impact numbers.
These are the ‘market movers’. A lot of the other news is often just noise clogging up your brain.
It’s a good idea to look at recent GBP/USD price history – looking for trends and trading ranges.
A lot of movement in exchange rates is due to speculators buying and selling currencies for profit. They can cause a lot of ups and downs – and provide you with opportunities.
If you don’t feel confident going it alone, you may benefit from speaking to a currency expert.
We can discuss the latest GBP/USD rates and target levels and even let you know if the rate moves in your favour.
Why not get a quote from us below?
GBP to USD Forecast (next 6 months and beyond)
The longer the period, the greater the chance of big moves in exchange rates.
When you look at the difference between the highs and lows in the GBP/USD rate over the past year alone, you will appreciate how much currencies fluctuate over time.
A 1%-2% swing would be considered a big move over a week, however over a year or more; it’s not unusual to see swings of 5%-10%.
In effect, the opportunities (and risks) are greater.
Timing matters even more.
My practical advice for anyone looking at long-term GBP/USD forecasts is to use historical rates as your guide and to keep your expectations realistic.
I always look at the current exchange rate in comparison to the last 1 year and 5 years.
Beyond 5 years, I think exchange rates lose relevance in today’s world.
On whatever timeframe you choose, you will notice that exchange rates hit peaks and troughs on a fairly frequent basis.
Regarding the GBP to USD exchange rate, a peak is good for buyers of Dollars, and a trough is good for sellers of Dollars.
You aim to take advantage of favourable fluctuations.
One thing to note is that the ‘perfect time’ never comes along.
I’ve met people who are hanging on to something that will never happen. The hidden cost is their life plans are put on hold while they wait.
Exchanging money is about trying to achieve the best rate possible and then, quite frankly, moving on with your life.
Need guidance on GBP/USD exchange rates?
Getting a good or bad GBP/USD exchange rate can make a big financial difference to you.
However, trying to navigate the world of foreign exchange can be stressful.
For most people, it’s not something they are familiar with.
At Key Currency, the way we operate is fundamentally different from a lot of other money transfer companies.
Most companies you will come across these days are just online systems or apps.
There is no human help or assistance.
An important part of our service is to monitor exchange rates on behalf of our clients and help them take advantage of favourable moves.
At Key Currency, we give you a one-to-one service.
We understand your requirements and work with you to exchange your money to your best advantage.
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