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. Exchange rate forecasts help banks, businesses and individuals, make better-informed decisions.
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 recent history.
Over the past 5 years, the GBP/USD rate has been as high as $1.4328 and as low as $1.1492.
Based on the GBP/USD rate over the past 5 years, now is not a great time to buy US Dollars with British Pounds because the exchange rate is closer to the bottom-end of the historical trading range.
The higher the GBP/USD exchange rate, the cheaper it is to buy US Dollars with British Pounds.
And the lower the GBP/USD rate, the more costly the Dollar becomes.
Will the Pound get stronger against the US Dollar?
2021 was a mixed year for the GBP/USD rate – rising in the first half of the year, but then falling in the second half of the year.
So far in 2022, the trend in the GBP/USD exchange rate has been downward as the US Dollar has been strongly favoured by investors.
The most pressing issue at the moment is the rise in global inflation.
It has led investors to take a more cautious approach to currencies, which has increased the appeal of the US Dollar.
It’s because the US Dollar has long been considered a ‘safe haven’ in times of trouble.
The US Dollar is the dominant currency for international trade and foreign reserves.
Put simply, when things turn ugly, institutional investors move their money into US Dollars and away from other currencies like the British Pound.
I’m talking about big banks, hedge funds, foreign governments and the like.
As they shift their billions around, they move the currency markets.
While the Pound is not considered a risky currency, it doesn’t share the same status as the US Dollar.
Right now, there are serious concerns over the Ukraine invasion, global inflation, rising interest rates and the risk of recession.
That’s more than enough to spook investors.
At a fundamental level, both the UK and the US face similar issues. Both economies have high inflation and low growth. There’s not much to separate them.
But it’s the safety of the US Dollar that is making the difference.
As a general rule, good times favour the Pound and troubled times favour the US Dollar.
If the economic climate continues to cool, we see the downtrend in GBP to USD rates continuing.
It has to be said that forecasting exchange rates is not an exact science.
It’s more a case of probability.
You seek to make an informed judgement based on what is presently known or can be anticipated.
As part of our money transfer service, we keep our clients up-to-date with the latest currency news and exchange rate trends.
Why not request a quote below and see if we can help.
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 is to check out the GBP/USD Forecast Poll on FX Street.
It lists the views of 38 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.
You can then see if there is a Bullish or Bearish bias over each of the time periods.
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 will only ever have certainty in hindsight.
Forecasting is about probability.
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.
It’s worth looking at what’s scheduled on the DailyFX Economic Calendar.
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’. The rest is often just noise.
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 the ups and downs – and provide you with opportunities.
If you don’t feel confident going it alone, you may wish to speak with a money transfer service that can help.
We can discuss current rates, target levels and even let you know if the rate moves in your favour.
To find out more about Key Currency, or check out our latest rates, click below.
GBP to USD Forecast (next 6 months and beyond)
The longer the time period, the great the chance of big moves in exchange rates.
When you look at the difference between the highs and lows in GBP/USD rate over the past year alone, you will appreciate how much currencies do fluctuate over time.
A 1%-2% swing would be considered a big move over the course of 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.
Personally, 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 relevancy to today’s world.
On whatever timeframe you choose, you will notice that exchange rates hit peaks and troughs on a fairly frequent basis.
In terms of the GBP to USD exchange rate, a peak is good for buyers of Dollars, and a trough is good for sellers of Dollars.
Your aim is to take advantage of favourable fluctuations.
One thing to note – the ‘perfect time’ never comes along.
I’ve met people that are hanging on for 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 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.
But trying to navigate the world of foreign exchange can be stressful, particularly if it’s something you are not overly 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 really just online systems or apps.
There is no human assistance.
In contrast, 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, allowing us to understand your requirements and 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.
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