Author, Andrew Gibson
A GBP to USD forecast is an expectation of the exchange rate in the future – whether days, weeks or even years away. Pound to Dollar exchange rate forecasts help banks, businesses and individuals, make better-informed decisions.
Is the Pound getting stronger against the US Dollar?
The British Pound has been range-bound against the US Dollar so far in 2024. Put simply, there doesn’t appear to be a clear underlying trend in the short term.
We see the medium-term trend in GBP/USD as remaining positive with the US expected to cut interest rates in 2024 many months before the UK does. A wild card in 2024 will be the US election, although the results from this won’t be known until November 2024 at the earliest.
Here’s a quick summary of what’s been happening:
The US core inflation rate is now back down to the target level of 2%. If it remains at these levels, it will allow the US Federal Reserve to cut interest rates.
The timing of this is uncertain, but most economists expect the first cut in May or June this year. Up to three cuts are expected in the US in 2024.
In the UK, inflation is still sitting at roughly double the Bank of England’s target rate. This means that no interest rate cuts are expected in the UK any time soon. There are still some committee members voting for rate increases!
What does that mean in terms of Pound to Dollar going forward?
Higher interest rates typically strengthen a currency, and vice versa. The policy difference between the US and UK central banks should favour the Pound relative to the Dollar.
In terms of economic growth, the US is in a much stronger position.
The OECD has forecast the UK economy to grow by 0.7% in 2024.
The US is also expected to grow by 1.5% in 2024.
Put simply, the US economy is forecast to grow at double the rate of the UK economy in 2024.
While higher growth will support the US dollar, we see interest rate policy as being more influential on the Pound to Dollar exchange rate and therefore maintain a positive bias towards the Pound in 2024.
What about the US election?
In terms of the US Dollar, history tells us that political leaders matter less than economic policy.
Of course, leaders influence policy, so they do matter.
Let’s assume it will be another Biden vs Trump showdown (looks very likely).
Goldman Sachs strategists believe said a Trump victory could boost the US Dollar given his emphasis on trade and taxes. They did however warn that any impact on the Dollar may be slow to take effect as the result from the last few elections has been close.
For followers of GBP/USD, I would ignore the US election as a factor for now.
Forecasting exchange rates is not an exact science.
It’s more a case of probability than certainty.
Many factors drive exchange rates. And they change every day.
When you search online and see an exact forecast in 6 months to 4 decimal points (and you will find them!), you are looking at pure fantasy. You are best at using a bit of common sense.
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, the current exchange rate is at a neutral level, meaning it is neither near its highs nor lows.
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 33 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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Rest assured, Key Currency is an FCA-regulated Authorised Payment Institution (No. 753989), and as such, all money transfers are conducted through safeguarded client accounts.
If you would like to find out our latest rates or would like to discuss GBP to USD rates and trends, please request a free quote below.