**Pound to Dollar Forecast: Focus Shift to 1.3465 Says Bank**
*Original reporting by CurrencyNews.co.uk staff*
The GBP/USD currency pair—commonly known as “Cable”—has been in sharp focus among forex market participants as recent weeks have seen renewed volatility, a shifting U.S. economic narrative, and evolving expectations for both the Federal Reserve and the Bank of England. As the dollar moves off its recent highs and sterling finds support, a number of leading financial institutions have recalibrated their projections. Most notably, analysts at one major multinational bank have pinpointed a medium-term target of 1.3465 for GBP/USD, arguing that market fundamentals and technical setups are aligning in the pound’s favor.
### Shifting Sentiment in the FX Market
Sterling’s fortunes have been inexorably tied to moves in the dollar, the global macro backdrop, and central bank commentary. Recent momentum has seen GBP/USD rally from just above 1.26 to test resistance closer to 1.29, before consolidating just below this range. The headline from the bank’s latest research note is clear: the focus is now shifting higher, with 1.3465 in sight if certain conditions hold.
#### Key Factors Driving GBP/USD’s Outlook:
– **Easing U.S. inflation and dovish signals from the Federal Reserve**
– U.S. inflation data, while sticky, has started to show signs of easing.
– Federal Reserve officials have recently signaled that rate hikes may be finished, with discussions shifting toward potential rate cuts in the later part of the year.
– The dollar, which rallied strongly through 2022 and much of 2023 on higher rates, has retraced as rate differentials narrow.
– **Improving UK economic sentiment**
– UK growth data has come in better than feared, with the economy rebounding from technical recession territory.
– Headline inflation in the UK continues to decline, though core metrics remain elevated—forcing a more cautious tone from the Bank of England.
– **Relative monetary policy divergence**
– While the BoE is expected by many to move cautiously on rate cuts, market participants anticipate the Federal Reserve may ease earlier.
– This closing policy gap is supportive of GBP/USD, encouraging flows back into sterling assets.
– **Technical developments**
– The currency pair has broken through several resistance levels, emboldening bulls and shifting the tactical focus higher.
### Macro Landscape: Dollar Weakness, Sterling Strength
Much of the analytical spotlight has landed on the evolving U.S. macroeconomic picture. The Federal Reserve’s balancing act—taming inflation without stifling growth—has held the world’s attention all year. With the dollar previously bid on the back of aggressive rate hikes, 2024 has so far seen a pullback as inflation metrics softened and labor data pointed to a cooling jobs market. The market’s expectation for two potential rate cuts before year-end has been reflected in the greenback’s decline against major counterparts, with GBP/USD benefiting accordingly.
For the UK, recent economic updates have brightened the sky after a dreary period in late 2023. GDP growth is modest, but upward revisions and resilient services data have bolstered confidence. While inflation remains higher than the Bank of England’s 2% target, headline CPI has fallen sharply over the past year due to a drop in energy and goods prices.
#### Interest Rate Differential: Closing Gap Boosts GBP
One of the most significant medium-term supports for GBP/USD is the shifting interest rate differential. The Bank of England, facing persistent underlying price pressures and wage growth, has adopted a notably cautious tone. By contrast, the Federal Reserve is now expected to cut rates twice by the end of year, as the U.S. economy slows toward a soft landing.
This dynamic—of the BoE holding for longer while the Fed pivots to lower rates—directly supports a stronger pound.
– **Rate
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