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Pound Sterling Price News & Forecast: GBP/USD weakens to around 1.3470 on Wednesday
Confirmed
In Short: The British Pound (GBP) weakened against the US Dollar (USD) as the US Dollar strengthened amid expectations of a US interest rate hike.
Britain's rate futures fully price four Bank of England hikes by the middle of next year, reflecting market expectations. However, traders are bracing for the UK August Consumer Price Index (CPI) inflation report and the Federal Reserve's (Fed) interest rate decision, which is expected to hike the benchmark interest rate by 25 basis points (bps) in response to rising energy prices and underlying inflation.
The Pound-US Dollar exchange rate is forecast to be at 1.3479 in one month, according to market-implied pricing. The US Dollar's strength is attributed to expectations of a US interest rate hike, which has pushed the USD higher against the GBP. The US Consumer Price Index (CPI) data held at 3.4% year on year in August, matching both July's reading and market expectations, according to the Bureau of Labor Statistics (BLS).
Markets are increasingly convinced that the Fed will hike the benchmark interest rate by 25 basis points at its September policy meeting in response to the jump in energy prices that has pushed underlying inflation by more than expected in August. This has led to a renewed global bond-market sell-off, which has unsettled risk appetite and pushed UK borrowing costs to their highest levels since 2008.
The Pound to Dollar exchange rate has retreated towards two-week lows around 1.3530 as a result of this sell-off. The dollar lost ground on Monday, partly due to month-end position adjustments, but it recovered ground on Tuesday and traded around 1.3530, close to two-week lows and near the key 1.3500 level. The Pound faces conflicting forces from the surge in gilt yields, with higher returns offering carry support while simultaneously reviving concerns over fiscal sustainability and the UK economic outlook.
Domestically, UK shop prices increased 1.5% in the year to August from 0.9% previously, and oil prices increased on Tuesday while UK gas prices hit fresh three-year highs. These factors, combined with the expectation of a US interest rate hike, have contributed to the weakening of the GBP against the USD. The Pound to Dollar exchange rate outlook summary suggests a broadly steady GBP/USD, with projections of 1.3385 late 2026, 1.3438 early 2027, and 1.3560 late 2027.
What's confirmed
- Britain's rate futures fully price four Bank of England hikes by the middle of next year, reflecting market expectations. However, traders are bracing for the UK August Consumer Price Index (CPI) inflation report and the Federal Reserve's (Fed) interest rate decision, which is expected to hike the benchmark interest rate by 25 basis points (bps) in response to rising energy prices and underlying inflation.
- The Pound-US Dollar exchange rate is forecast to be at 1.3479 in one month, according to market-implied pricing. The US Dollar's strength is attributed to expectations of a US interest rate hike, which has pushed the USD higher against the GBP. The US Consumer Price Index (CPI) data held at 3.4% year on year in August, matching both July's reading and market expectations, according to the Bureau of Labor Statistics (BLS).
- Markets are increasingly convinced that the Fed will hike the benchmark interest rate by 25 basis points at its September policy meeting in response to the jump in energy prices that has pushed underlying inflation by more than expected in August. This has led to a renewed global bond-market sell-off, which has unsettled risk appetite and pushed UK borrowing costs to their highest levels since 2008.
- The Pound to Dollar exchange rate has retreated towards two-week lows around 1.3530 as a result of this sell-off. The dollar lost ground on Monday, partly due to month-end position adjustments, but it recovered ground on Tuesday and traded around 1.3530, close to two-week lows and near the key 1.3500 level. The Pound faces conflicting forces from the surge in gilt yields, with higher returns offering carry support while simultaneously reviving concerns over fiscal sustainability and the UK economic outlook.
- Domestically, UK shop prices increased 1.5% in the year to August from 0.9% previously, and oil prices increased on Tuesday while UK gas prices hit fresh three-year highs. These factors, combined with the expectation of a US interest rate hike, have contributed to the weakening of the GBP against the USD. The Pound to Dollar exchange rate outlook summary suggests a broadly steady GBP/USD, with projections of 1.3385 late 2026, 1.3438 early 2027, and 1.3560 late 2027.
What's still developing
- A currency pair prices the gap between what two central banks are expected to pay, not the level either sits at.
- Live GBP/USD exchange rate with intraday chart, daily statistics, forecasts and latest news.
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- For the latest analysis visit the GBP/USD News Hub → These predictions are based on the forward points being traded in currency markets.
- Know more. ) Agustin Wazne joined FXStreet as a Junior News Editor, focusing on Commodities and covering Majors.
- On a monthly basis, prices rose 0.4%, a marked pick-up from the 0.1% gain the month before.
- The core measure, which strips out food and energy, rose 0.3% on the month, above the 0.2% forecast, although the annual core rate eased to 2.4% from 2.5%.
- In the daily chart, USD/JPY trades at 153.69, extending a corrective bearish phase with price lodged well below the 20-day Simple Moving Average (SMA) at 157.65 and the 100-day SMA at 159.68, which now frame a broad cap on any recovery attempts.