Modified: Thursday, 4 December 2025 21:10 BST
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STORY LINK GBP to USD Forecast: Pound Sterling Extends Gains Ahead of Key US Sentiment Data
The Pound to US Dollar exchange rate (GBP/USD) touched a fresh one-month high on Thursday, supported by a mildly risk-on market tone and rising expectations of imminent Federal Reserve interest rate cuts.
At the time of writing, GBP/USD was trading at $1.3363 – its strongest level since late October.
The Pound (GBP) spent Thursday trading within a narrow range, with the absence of new UK data leaving Sterling without a strong directional catalyst.
Lingering reactions to the UK’s autumn budget continued to influence sentiment. Reports suggesting that uncertainty ahead of the fiscal statement had cooled investment, dampened business confidence, and contributed to a slowdown in construction activity added to the mixed response to Labour’s late-November plans.
Even so, the increasingly risk-sensitive Pound managed to hold onto its recent momentum against the US Dollar (USD), briefly pushing to a new one-month high as broader market appetite shifted toward risk.
The US Dollar remained under pressure on Thursday, with upbeat market sentiment limiting demand for the safe-haven currency.
Speculation that the Federal Reserve may accelerate monetary easing over the coming months weighed heavily on USD sentiment. With a rate cut widely expected at next week’s meeting, and recent signs of a cooling US labour market reinforcing expectations of further easing, investors saw little reason to move back into the ‘Greenback’.
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Adding to the downward pressure were reports that Kevin Hassett, a close ally of President Donald Trump, is likely to replace Jerome Powell as Federal Reserve Chair when Powell’s term ends in May 2026, a move that markets view as supportive of a more dovish policy path.
GBP/USD Exchange Rate Forecast: US Dollar Poised for Additional Weakness?
Looking ahead, Friday’s release of the University of Michigan’s consumer sentiment index will be the key focus for USD traders. Sentiment is expected to show a slight improvement in December, which may offer the Dollar some modest support — though confidence remains historically fragile.
Even so, firm expectations that the Federal Reserve will cut interest rates next week, and may increase the pace of easing through 2026, are likely to keep the ‘Greenback’ under pressure in the short term.
For the Pound, the absence of major UK economic releases going into the weekend means GBP will continue to take its cues from broader market sentiment. A risk-on mood could help Sterling extend gains against the Dollar, while any deterioration in confidence may pull the currency lower.
Continued scrutiny of the autumn budget fallout — including concerns about leaks and mixed briefings surrounding the announcement — could also exert a subtle influence on GBP trading.
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TAGS: Pound Dollar Forecasts