Pound-to-Dollar Bank Forecasts 'On Point'
- Written by: Gary Howes
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It's a case of so far, so good for investment bank currency analysts as the pound to dollar exchange rate tracks their forecasts.
As March approaches, we assess how accurate the year-ahead forecasts made by the world's biggest investment banks are proving.
GBP/USD trades at 1.3447 at the time of writing, putting it on course to achieve the Q1 median forecast made by over 30 of the world's leading financial institutions surveyed by Pound Sterling Live on behalf of Horizon Currency.
The data, made available by Horizon Currency on request, is considered highly accurate as it incorporates numerous models and the thinking of the world's leading analysts. It allows those with international payment requirements to objectively assess their payment budget and rationalise the decision-making process.
GBP/USD price action follows a relatively eventful start to the year, but ultimately, institutional analysts have rightly predicted the outcome of the push-and-pull on the dollar posed by U.S. policy uncertainty and a resilient economy.
The consensus saw 2026 as being a difficult year for the dollar, but as Adarsh Sinha, FX and Rates Strategist at Bank of America, points out, consensus year-ahead views tend to get burned out pretty early in any given year.
This could yet happen, but for now, pound-dollar is behaving as expected and is orbiting the consensus zone rather than diverging sharply from it, reinforcing the credibility of the aggregated forecast process and the value of monitoring how institutional expectations evolve through the year.
At the start of the year, institutions downgraded point forecasts for GBP/USD, even if they still saw the ultimate path leading higher for the pair.
Domestic headwinds, including the UK's precarious public finances and Keir Starmer's tenuous hold of Number 10 Downing Street, saw reason to pare back sterling's ambitions.
"Renewed challenges to Prime Minister Keir Starmer's leadership, particularly following the May 2026 local elections, represent a major risk of political instability. A leadership change could unnerve markets and lead to a sell-off in sterling," says Sergio Capaldi, Fixed Income Strategist at Intesa Sanpaolo.
Readers who want the full breakdown of bank-by-bank projections, dispersion ranges and strategic implications can request the complete institutional forecast pack directly from Horizon Currency.
