Author, Andrew Gibson
A GBP to USD forecast is an expectation of the exchange rate in the future – whether days, weeks or even years away.
Pound to Dollar exchange rate forecasts help banks, businesses and individuals, make better-informed decisions.
Is the Pound getting stronger against the US Dollar?
In September 2024, the GBP to USD rate reached 2 1/2 year highs. However, since then the GBP/USD rate has fallen significantly due mainly to strength in the US Dollar.
The Trump election win has fuelled a rally in the US Dollar as his proposed policies are being viewed by markets as pro-growth/pro-inflation. Under such conditions, US interest rates would remain higher for longer – hence the rise in US Dollar and fall in the Pound to Dollar rate.
Here’s a quick summary of what’s been happening:
Both the US and UK have seen a rapid decline in inflation rates and have begun the process of cutting interesat rates.
Movements in interest rates is often the most important factor in predicting exchange rates.
While both the UK and US have begun to make cuts, their central banks are taking a cautious approach.
That might surprise some people because inflation levels are now back near the target rate, but central bankers know from history that inflation can be difficult to restrain once it works its way into the economy.
The Bank of England recently cut interest rates in their November 2024 meeting.
The US Federal Reserve is expected to do the same at its December 2024 meeting.
As for next year, futures markets are pricing around 60 basis points of UK interest rate reductions by the end of 2025. A typical cut is 25 basis points (0.25%), so 60 basis points implies investors think 2-3 cuts will take place in 2025.
In the US, futures markets are indicating that the Federal Reserve is expected to cut rates by 67 basis points – slightly more than the UK.
You would expect the US Dollar to weaken (and GBP/USD to rise) if interest rates are cut more in the US than the UK.
We don’t see much policy difference on interest rates between the US and UK heading into 2025, so given how much the GBP/USD rate has risen over the past 6 months, it’s hard to see the Pound holding onto those gains.
If you aren’t someone who follows the news and markets on a frequent basis, it may be worth speaking to someone who does.
Overall, we would suggest focusing on short-term trends.
Trying to forecast currencies months or years in advance tends to be a waste of time. There are too many variables.
Forecasting exchange rates is not an exact science – unless you’re a guru flogging a product.
Many factors drive exchange rates. And they change every day.
You are best at using a bit of common sense.
As part of our money transfer service, we keep our clients up-to-date with the latest exchange rate trends and opportunities.
Why not request a quote below and see if we can help?
Is it a good time to buy USD with GBP?
An easy way to tell whether it’s a good or bad time to buy US Dollars is to look at its recent trading history.
Based on the GBP/USD rate over the past 2 years, 5 years or even 10 years, the current GBP to USD exchange rate is well above its average and therefore it’s a favourable time for buyers of US Dollars.
Buyers of US Dollars benefit from a higher GBP/USD exchange rate.
As always it depends on what period you are looking at. Over a longer timeframe, such as 5 years, the Pound to Dollar exchange rate is currently near the middle of its trading range.
Over the past 5 years:
The high in the GBP/USD rate was $1.4328
The low in the GBP/USD rate was $1.0697
Often it takes a major event to push the Pound to Dollar exchange rate to extreme levels.
In the absence of any significant news, the exchange rate tends to fluctuate far less. This is an important consideration if you are trying to decide when to exchange your money.
If you need to transfer money to the USA, we have written a helpful article explaining how to transfer Pounds to US Dollars.
GBP to USD Forecast Poll (1 week, 1 month, 1 quarter)
There are countless methods and models used to forecast GBP/USD rates.
A simple way to see what the overall consensus is among analysts.
While it’s hard to predict exchange rates to an exact number, it doesn’t stop people from trying.
FX Street provide a comprehensive poll of GBP/USD forecasts.
It lists the views of 33 analysts over 1 week, 1 month and 1 quarter timeframes.
To make things easy, there is a graph at the top of the page that summarises the consensus view.
Pick a period that suits you.
You can then see if there is a Bullish or Bearish bias overall.
A bullish bias means analysts are forecasting the Pound will rise against the US Dollar. Conversely, a bearish bias indicates the Pound is expected to fall.
Don’t be concerned by the fact that there is plenty of disagreement among analysts. That’s normal.
The point of forecasting is never to reach certainty.
You only ever have certainty in hindsight.
Forecasting is about probability rather than precision.
GBP to USD Forecast Weekly (my short-term approach)
A timeframe of only 1 week warrants a different approach to someone looking at longer time horizons.
Over 1 week, there’s only a small amount of economic news that will take place.
An economic calendar can help you with this.
I would recommend using the DailyFX economic calendar as a source of upcoming news and events.
I prefer the DailyFX calendar because it shows the impact each number is expected to make (low, medium or high).
My approach is to focus only on the high-impact numbers.
These are the ‘market movers’. A lot of the other news is often just noise clogging up your brain.
It’s a good idea to look at recent GBP/USD price history – looking for trends and trading ranges.
A lot of movement in exchange rates is due to speculators buying and selling currencies for profit. They can cause a lot of ups and downs – and provide you with opportunities.
If you don’t feel confident going it alone, you may benefit from speaking to a currency expert.
We can discuss the latest GBP/USD rates, and target levels and even let you know if the rate moves in your favour.
Why not get a quote from us below?
GBP to USD Forecast (next 6 months and beyond)
The longer the period, the greater the chance of big moves in exchange rates.
When you look at the difference between the highs and lows in the GBP/USD rate over the past year alone, you will appreciate how much currencies fluctuate over time.
A 1%-2% swing would be considered a big move over a week, however over a year or more; it’s not unusual to see swings of 5%-10%.
In effect, the opportunities (and risks) are greater.
Timing matters even more.
My practical advice for anyone looking at long-term GBP/USD forecasts is to use historical rates as your guide and to keep your expectations realistic.
I always look at the current exchange rate in comparison to the last 1 year and 5 years.
Beyond 5 years, I think exchange rates lose relevance in today’s world.
On whatever timeframe you choose, you will notice that exchange rates hit peaks and troughs on a fairly frequent basis.
Regarding the GBP to USD exchange rate, a peak is good for buyers of Dollars, and a trough is good for sellers of Dollars.
You aim to take advantage of favourable fluctuations.
One thing to note is that the ‘perfect time’ never comes along.
I’ve met people who are hanging on to something that will never happen. The hidden cost is their life plans are put on hold while they wait.
Exchanging money is about trying to achieve the best rate possible and then, quite frankly, moving on with your life.
Need guidance on GBP/USD exchange rates?
Getting a good or bad GBP/USD exchange rate can make a big financial difference to you.
However, trying to navigate the world of foreign exchange can be stressful.
For most people, it’s not something they are familiar with.
At Key Currency, the way we operate is fundamentally different from a lot of other money transfer companies.
Most companies you will come across these days are just online systems or apps.
There is no human help or assistance.
An important part of our service is to monitor exchange rates on behalf of our clients and help them take advantage of favourable moves.
At Key Currency, we give you a one-to-one service.
We understand your requirements and work with you to exchange your money to your best advantage.
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Rest assured, Key Currency is an FCA-regulated Authorised Payment Institution (No. 753989), and as such, all money transfers are conducted through safeguarded client accounts.
If you would like to find out our latest rates or would like to discuss GBP to USD rates and trends, please request a free quote below.