Bias: bearish-to-range-bound, with USD/GBP below the 90-day average and in the lower part of the 3-month range.
Key drivers:
- Rate gap: The US central bank is expected to ease toward a neutral stance this year, while the Bank of England signals a cautious path with gradual cuts.
- Macro factor: UK growth is projected to slow in 2026, keeping downside pressure on the pound as households and services face headwinds.
- Risk appetite: firmer global risk appetite tends to support the pound versus the dollar, while weaker moods can lift the dollar.
Range: expect a drift within the recent 3-month range, with mild tests toward the lower bound.
What could change it:
- Upside risk: stronger US payroll data or a more hawkish tilt from Fed officials could lift the dollar.
- Downside risk: softer US data or clearer signals of quicker BoE easing could weigh on the pound.
