After finishing 2020 strongly the pound continued higher to 3-YEAR-HIGHS in May/June, as markets remain optimistic for the rollout of Covid-19 vaccines.
Forecasts Updated: Jul 27, 2021
GBP/USD – The British Pound also had a choppy trading week. Sterling finished at 1.3766 on Friday from 1.3765 a week ago. While there was little net change, the GBP/USD pair saw a low at 1.3572 (Wednesday) and a high at 1.3862 (last Friday). An unexpected rise in UK Retail Sales released on Friday buoyed the Pound. Markets will look to coronavirus and Brexit developments this week.
GBP to USD at 1.3905is just below its 90-day average, range 1.3628-1.4208.
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GBP/USD – closed the week at 1.4160 (1.4210 last week). The Fed’s hawkish shift hit the Pound hard, pushing it 1.6% lower in 2 days. GBP Forecasts
Last week saw the US Dollar slowly but surely grind its way higher against all its Rivals. USD Forecasts
Last year the pound hit its highest level vs the US dollar since April 2018 against the US dollar on the final day of the year and has since continued higher to 3-YEAR-HIGHS around $1.40. Markets remain optimistic about GBP as the rollout of Covid-19 vaccines add to the currency’s relief rally following the Brexit trade deal.
British Pound to US dollar forecasts
The GBP to USD exchange rate has been and remains one of the most interesting currency pairs to forecast. The GBP/USD can be affected by a number of factors and this makes it a volatile exchange rate at times.
ING predict GBP/USD should breach 1.50 this year. While risks remain in place (the negative headline news around the Scottish independence referendum; the ongoing risk of tariffs should UK government choose to deviate from EU labour laws), these should only slow, rather than reverse, sterling’s upside.
The UK is ahead of other large economies in the race to inoculate its population against the virus, with more than 4 million people in the UK having already received their first dose of a Covid-19 vaccine.
After dropping to US$1.27 towards the end of September the pound has steadily risen to its year highs touching US$1.37 in mid January on the resolution to the Brexit uncertainty.
This proves currency analysts correct who had predicted the currency could trade above $1.35 if the EU and UK managed to do a deal, a much better result for Sterling than the predictions for a no-deal outcome, where the pound was seen dropping to about $1.25.
NAB have revised upwards their pound sterling forecasts now expecting the GBP/USD rate to be at US$1.47 by June 2022, up from their previous forecast of US$1.39. For 2020, it sees GBP at US$1.36 by year-end, up from a predicted US$1.30.
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What is a good GBP to USD exchange rate?
Whether the US dollar will rise or drop in the future against the pound is a difficult question and the answer really depends on many factors. The best way to consider the current GBP-USD relative value is to check the change in the exchange over a range of periods to the present day. The below table does this for periods going back 10 years.
ING predict GBP/USD should breach 1.50 this year. While risks remain in place (the negative headline news around the Scottish independence referendum; the ongoing risk of tariffs should UK government choose to deviate from EU labour laws), these should only slow, rather than reverse, sterling’s upside. 
NAB have revised upwards their pound sterling forecasts now expecting the GBP/USD rate to be at US$1.47 by June 2022, up from their previous forecast of US$1.39. For 2020, it sees GBP at US$1.36 by year-end, up from a predicted US$1.30.