– Written by
David Woodsmith
STORY LINK Pound Sterling to Dollar Forecast: Jackson Hole Next Risk for USD
The Pound to Dollar exchange rate (GBP/USD) has held close to six-month highs around 1.3650 as softer Dollar sentiment and recent position adjustment continue to support Sterling.
With investors increasingly questioning the US policy outlook ahead of Jackson Hole, GBP/USD remains well placed to challenge 1.3700 if the Dollar comes under renewed pressure.
GBP/USD Forecasts: Probing 6-Month Highs
The Pound to Dollar (GBP/USD) exchange rate again tested the 1.3650 area on Tuesday before consolidating around 1.3640 as tight ranges prevailed. UoB is still expecting GBP/USD gains to 1.3700.
Scotiabank maintains a positive GBP/USD outlook; “The GBP’s latest rally looks to have stalled above 1.3650, around the peaks from early May. We note the absence of any meaningful resistance ahead of the 2026 high above 1.3800.”
Danske Bank considers that position adjustment has driven dollar losses; “We think that the latest USD FX weakness has been amplified by a shift in positioning. Just a month ago, IMM positioning data showed that noncommercial investors were caught stretched long USD going into late summer. And judging by risk reversal skews, this has quickly been reversed over the past week and a half.”
According to ING; “The balance of risks for the dollar remains skewed to the downside, but our baseline is for further consolidation into the Jackson Hole risk event later this week.”
Save on Your GBP/USD Transfer
Get better rates and lower fees on your next international money transfer.
Compare TorFX with top UK banks in seconds and see how much you could save.
Trade tensions could also be a key element. ING commented; “China is the main focus here. Any serious revival of the US-China trade spat would be negative for the dollar in our view, mirroring last year’s USD correlation with the issue. The US-Canada dispute could incidentally amplify that negative dollar reaction.”
Scotiabank has a negative overall stance on the US currency; “Dollar sentiment remains soft, as reflected in risk reversal pricing for the Bloomberg dollar index which has gravitated away from a premium for dollar calls over the past month.”
It added; “Investors will want clear signals from US policymakers on the promised fiscal consolidation plan from Bessent and on the Fed’s reaction function from Warsh at Jackson Hole or the dollar is liable to come under renewed pressure.”
As far as data is concerned, the consumer confidence index edged lower to 89.4 for August from a revised 90.2 the previous month.
Conference Board Chief Economist Dana M Peterson commented; “The Expectations Index slipped further into negative territory, which was offset by a moderate rise in the Present Situation Index after declining in the past three months.
She did add; “Perceptions of the current labor market improved, reversing three months of moderate decline.”
New home sales also declined to an annual rate of 607,000 from a revised 678,000 the previous month.
Danske Bank is still confident in the US outlook and has a positive medium-term outlook on the dollar; “The US business cycle shows few signs of cooling momentum with the composite PMI rising to 56.0 in August – the highest since March 2022.”
International Money Transfer? Ask our resident FX expert a money transfer question or try John’s new, free, no-obligation personal service! ,where he helps every step of the way,
ensuring you get the best exchange rates on your currency requirements.
TAGS: Pound Dollar Forecasts
