The Pound to US Dollar forecast is an indication of where technical and fundamental analysts think the GBPUSD price may be in the future. You can use these exchange rate forecasts to help you decide if now is the right time to buy Dollars, or if you should wait until the price improves.
Highlights
- US Dollar is running weak as traders no longer seek safety in greenback
- A less hawkish Fed monetary policy, a festering regional banking crisis and deficits are dimming the allure of USD
- GBPUSD has been edging higher since March and now trades near its one-year high above 1.250
How has the Pound performed against the Dollar recently?
Much has happened in the financial markets since our last update on GBPUSD at the start of year.
Three worrying developments caught my attention:
- Ongoing banking crisis in the US – Silicon Valley Bank, Signature Bank and First Republic Bank have collapsed in the past few months; their lightning demise had caught investors and regulators by surprise; not only that, it spilled over to Europe toppling Credit Suisse
- Sectors like property are under threat from high interest rates
- Economic recovery uneven – macro data are patchy as high inflation continues to plague the global economy
As a result of these developments, investors are no longer hoarding USD. The moment of glory for the greenback has passed in 2022. These days, investors are more worried about the US regional banking crisis and federal deficits.
Take a quick look at the Dollar Index – a currency index made up of several USD FX pairs. From its peak in 2022, the index has fallen by more than 10 percent to 101 (see below). The rebound earlier this year did not sustain, and prices have retreated back to the floor near 100 once more.
In fact, trading guru Drunkenmiller has recently remarked that betting against the Dollar is his number one high-conviction trade this year. This is due to the slowing US economy and the rise in non-dollar trade.
The Dollar weakness has filtered through to the GBPUSD pair. The chart for this FX rate has showed some positivity in recent weeks – in complete contrast to its negativity last year.
Prices recently rebounded sharply from 1.180; and are now staying above the 50-day moving average since late March. More importantly, the rate is flirting with a potential upside breakout at the psychological 1.250 level – a level not seen since May last year. Of course, traders may argue that the rate is near-term overbought and may regress back into the 1.220-1.230 support. This may happen.
Still the overall price trend for GBPUSD is positive and I would not discount a test of the major ceiling at 1.300.
Is it a good time to buy US Dollars with pounds?
Given Sterling is strengthening, yes now may be a good time to buy US dollars, especially if you know you require some dollars in the near term.
However, given the ongoing recovery in Sterling’s strength, if you can wait perhaps it may worthwhile to sit out and see if Sterling can push all the way back to 1.300. Typically momentum in the currency market tends to last.
US dollar’s weakness may persist into the end of the summer season and this may net you more dollars for the same amount of Sterling.
Will the pound get stronger against the USD in 2023?
Over the past few months, expectations of the world monetary policy have changed markedly.
Let’s take a look at the US and UK rate policies:
- US rate hikes are now expected to slow down in the months ahead. The last two meetings saw only 25bps increase each. A pause in hikes is now a possibility as macro data reflects a slowing economy. Note too that the US yield curve is fully inverted (see below). This means that a recession is in the pipeline in 2023/4.
- UK base rate – is scheduled to remain above 4% for now because of the persistently high inflation in the country. How high will the base rate go? Nobody knows. But we know that BOE’s monetary tightening may have to slow at some point this year. Complicating this policy is the weakening economy, in absolute and relative terms.
Due to these issues, investors are expecting near-term choppy trading in GBPUSD, especially as there are central bank meetings in early May. Yes, the rate appears to be moving in favour of GBP but it is not a clear-cut prediction that GBP will rally all the way above 1.300.
Technically, I expect GBPUSD to range at 1.20 to 1.28 for now. A corrective move to 1.220 is possible in view of the recent its overbought indicators. The major overhead resistance is at 1.300.
Source: Yardeni
What is the GBPUSD forecast in weeks, months, and years?
In light of the above discussion, most forecasts for GBPUSD is near the current level for the next few weeks.
Traders are waiting for clearer directions from the Fed and BoE in the coming days.
The current level may be unsustainable if either of the central bank alters the monetary policy drastically. For example, if one of the central banks halts the rate hikes completely and put out a notice to reverse the recent hikes. This would catch the market by surprise and lead to violent adjustments in expectations. GBPUSD would then jump out of its current torpor.
But that’s for the future. Right now, traders are focussing on the 1.240-1.260 region and see if GBPUSD can stay afloat this price range.
Source: fxstreet.com
Where is the best place for buying large amounts of US Dollars from Pounds
There are two different ways people buy Euros from Pounds
- Through a currency broker – like Currencies Direct, OFX or Global Reach when transferring large amounts of money abroad or a money transfer app like Wise.
- Through a forex broker – like CMC Markets, City Index or IG when speculating on the price of currency.
You can use this comparison table of currency brokers to see how many currencies they offer, what the minimum USD transfer is and if they offer forwards and currency options as well as when they were established. You can either visit each currency broker individually or use our currency quote comparison tool to request multiple exchange rates.
Or, if you are more interested in trading GBPUSD you can compare forex brokers here.
What is the live GBPUSD exchange rate?
The current GBPUSD exchange rate is $0.8031483 which is a change of -0.2% from the previous days closing price. Over a week GBPUSD is -0.2%, compared to it’s change over a month of 0.96% and one year of 1.38%.
GBPUSD exchange rate data is updated every 15 minutes.
