Pound to Dollar Forecast

As the energy crisis and the lack of government continue to take bites out of the British Pound, we are taking a look at the charts to see if they will give an idea of how far the Pound will fall.

The Pound to Dollar rate slipped to a new post-pandemic low to open the holiday-shortened week but could fall further yet if the Federal Reserve's (Fed) increasingly gloves-off approach to inflation continues to dampen risk appetite in another important week for the U.S. economic backstory.

"The long term GBPUSD chart now truly looks awful" - Citi.

Timing the Dollar's unyielding rally remains one of the key questions for financial and global markets at present: there is a sense that the rally is nearing its top, but exactly where the top is and when it will finally turn is harder to divine.

Morgan Stanley updates GBP forecasts, says GBP/EUR's peak has now passed, but GBP/USD to cross 1.20 in mid-2023.

The Pound to Dollar exchange rate came apart at the seams last week but would sustain deeper losses in the days ahead if a busy U.S. economic calendar or commentary from Federal Reserve (Fed) officials enable U.S. bond yields and the Dollar to build further on a nascent comeback. 

'Peak Dollar' has not arrived say analysts at ING Bank, meaning the Pound's lows against the U.S. currency might still lie ahead.

"The FX market is getting tired of waiting for the BoE to actually deliver something more hawkish." - HSBC's Dominic Bunning.

The Pound to Dollar exchange rate attempted to extend its month-long recovery last week but was unable to establish a new high and could now be headed for a period of consolidation unless an action-packed economic calendar provides a catalyst for a fresh advance in the days ahead.

The Pound is "in trouble" says an analyst at Société Générale, who is looking for a fresh decline in the Dollar to transpire.

The Pound to Dollar exchange rate drew a bid from the market when falling near to the 1.20 handle ahead of the weekend but could slip back toward or even below that level later this week if July’s U.S. inflation figures offer a further incitement to the still-hawkish Federal Reserve (Fed). 

The Pound to Dollar exchange rate rallied to one month highs above 1.22 last week but the going could get tougher in the days ahead when it will navigate a minefield of U.S. economic data risks just as the shadow of the Bank of England (BoE) looms larger and larger over Sterling. 

"I reckon we will see the likes of GBP and EUR, currencies that have performed very poor so far this year, stage a recovery against the greenback".

Wells Fargo confirms the Dollar will remain dominant over coming weeks, but strength should wane from the first quarter of 2023.

The Pound to Dollar exchange rate ended last week back above 1.20 and may have an opportunity to recover further, with a test of the 1.21 handle a possibility, if the Federal Reserve (Fed) sticks on Wednesday to its June plan to steer interest rates toward a “modestly restrictive level” by year-end. 

Foreign exchange strategists at Morgan Stanley have upgraded their stance on the British Pound to neutral.

The Pound to Dollar exchange rate corrected higher from near coronavirus crisis lows ahead of the weekend but could attempt to recover further lost ground with a run toward 1.20 in the days ahead if softer market pricing of the Federal Reserve (Fed) interest rate outlook continues to weigh on the greenback.

The Pound to Dollar exchange rate has stubbornly recovered the 1.20 handle but faces a battle to hold onto it in the days ahead during which it will be at risk of a slide toward the round number of 1.18 and may have difficulties in extending any further advance far above the 1.21 level. 

GBP/USD down 1.45 already this week, could be at 1.15 by end-July, Terms of Trade suggest parity even possible.

The British Pound will continue to lose value against the U.S. Dollar from current levels say foreign exchange strategists at JP Morgan.