The GBP to USD exchange rate currently shows a bearish bias.
Key drivers include the anticipated interest rate cuts from both the Bank of England and the Federal Reserve, with the BoE projected to lower rates to 3.25% by mid-2026. Additionally, fiscal concerns surrounding the UK's budget may affect the Pound negatively. Economic growth is slowing, with the UK expected to grow at 1.4% in 2026, down from 1.9% in 2025.
In the near term, the exchange rate is likely to trade within a stable range that reflects its current levels.
An upside risk could stem from unexpected improvements in UK economic data, while a downside risk might arise if the Federal Reserve implements rate cuts more aggressively than anticipated, further pressuring the USD.
Currently, GBP to USD is hovering around 1.3406, maintaining a stable range just 0.7% above its 3-month average.