Exchange Rates UK Research’s latest August 2026 survey of major investment banks points to a mixed near-term Pound-to-Dollar outlook followed by a stronger median forecast through 2027.
With GBP/USD currently around 1.3492, the median bank forecast stands at 1.33 for Q3 2026, around 1.34 for Q4, 1.35 for Q1 2027 and 1.36 for Q2. It then rises to 1.37 in Q3 and around 1.39 by Q4 2027.
The headline finding is therefore relatively straightforward: banks collectively see limited upside for sterling immediately, but the median projection eventually moves above today’s exchange rate and favours a stronger pound during 2027.
The full fx forecast range is considerably wider, extending from roughly 1.27 to 1.45 across 2027.
Latest Survey Shows GBP/USD Median Rising Through 2027
The latest Exchange Rates UK Research poll includes forecasts from 25 major banks and institutions for the nearer quarters, and the dispersion of views is almost as important as the median.
For Q3 2026, forecasts range between 1.30 and 1.38, with the median around 1.33 sitting below spot.
By Q2 2027, however, the median has climbed to 1.36, followed by around 1.37 in Q3 and close to 1.39 in Q4.
The bullish camp includes Bank of America, which forecasts GBP/USD at 1.40 in Q2 2027, 1.43 in Q3 and 1.45 by year-end. UBS sees 1.41 by Q2, while ABN AMRO reaches 1.40 by the end of 2027.
Scotiabank, TD Economics, CIBC and Westpac also envisage sterling strengthening into the upper 1.30s.
The bearish tail is substantial.
HSBC forecasts GBP/USD falling to 1.27 by Q2 2027, while Goldman Sachs and JP Morgan both have projections reaching 1.28. Citi maintains a prolonged low-1.30s profile.
This means the consensus should not be interpreted as banks uniformly expecting sterling appreciation. Rather, the centre of the distribution gradually moves higher while disagreement over the eventual destination remains unusually large.
US Jobs Shock Adds Another Variable to the Dollar Outlook
The survey arrives after an important change in the US macro picture.
July’s US employment report delivered a surprise decline in non-farm payrolls, while earlier months were revised lower. The weaker labour-market picture knocked the dollar and forced markets to reassess the likely path of Federal Reserve policy.
That provides some fundamental support for the more bullish GBP/USD forecasts in the survey: a weaker US labour market could eventually reduce the interest-rate support enjoyed by the dollar.
There is nevertheless a strong counterargument. US inflation pressures have not disappeared, leaving the Federal Reserve balancing a softer labour market against persistent price risks.
The UK picture is similarly nuanced.
Sterling’s outlook remains sensitive to the balance between UK inflation, economic growth and the Bank of England’s policy stance.
Changes in expectations for the relative paths of UK and US interest rates could therefore remain one of the most important drivers of GBP/USD over the remainder of 2026 and into 2027.
GBP/USD Outlook: 1.30 or 1.45?
The latest Exchange Rates UK Research survey does not point towards an immediate Pound-to-Dollar breakout.
Its Q3 median around 1.33 implies some downside from current levels near 1.35, while the Q4 median sits much closer to today’s exchange rate.
The picture becomes more constructive further ahead.
Median forecasts around 1.36, 1.37 and 1.39 through 2027 suggest investment banks collectively expect the balance to shift gradually in sterling’s favour.
For anyone with longer-term exposure to GBP/USD, however, the unusually broad forecast range deserves attention.
By late 2027, individual projections stretch from around 1.30 to 1.45.
The difference reflects sharply contrasting assumptions about Federal Reserve policy, US inflation and growth, and whether sterling can maintain sufficient interest-rate and economic support.
The median points towards a higher GBP/USD exchange rate over time.
The breadth of the latest bank forecasts suggests getting there could be anything but straightforward.
Read Exchange Rates UK’s Sentiment Survey results with extensive data/charts here.
