The GBP to USD exchange rate is currently range-bound.
Key drivers include:
- The Bank of England (BoE) is expected to cut interest rates to 3.25% by mid-2026, while the Federal Reserve is anticipated to proceed with cautious rate cuts, maintaining a narrower differential that may support the dollar.
- Cautious consumer and business sentiment stemming from fiscal concerns and slower economic growth in the UK add pressure on the pound.
- Both inflation trends and anticipated lower growth paint a challenging landscape for GBP as the economy adjusts.
The near-term trading range for GBP/USD is likely to fluctuate within a stable band, reflecting recent price stability.
Upside risk could emerge if stronger UK data surprises markets and prompts a reconsideration of rate cuts. Conversely, a firmer dollar driven by strong U.S. economic data could push GBP/USD lower.