**Pound Sterling to Dollar: Week-Ahead Forecast, Core PCE and GDP Revisions to Steer the Dollar**
*Credit: Adam Solomon, originally published at ExchangeRates.org.uk*
The foreign exchange market, as always, remains susceptible to a shifting array of global economic indicators, central bank signals, and geopolitics. As the week commencing August 26, 2025, begins, traders and analysts are intensifying their focus on influential U.S. data releases, particularly the Core Personal Consumption Expenditures (PCE) index and second-quarter GDP revisions. With the GBP/USD pair caught in a delicate tug-of-war between diverging monetary policy expectations and lingering economic uncertainties, the coming week’s releases could be pivotal in setting direction for the Pound Sterling against the U.S. Dollar.
#### Recent Performance Recap: Pound Sterling vs. US Dollar
The Pound Sterling (GBP) has wavered against the U.S. Dollar (USD) in recent weeks, reflecting a mix of domestic headwinds and external factors:
– Economic growth in the UK remains sluggish, hurt by persistent inflation pressures and downbeat business sentiment.
– The Bank of England holds rates steady but indicates caution, wary of stifling an already tentative recovery.
– Across the Atlantic, the Federal Reserve’s messaging has retained a hawkish tinge amid solid labor market data, even as inflation has shown signs of cooling.
These cross-currents have left GBP/USD sensitive to even small shifts in data and policy signals, heightening the market’s focus on upcoming economic releases.
#### The Week Ahead: U.S. Data to Dominate
Several market-moving releases from the United States are set to shape global risk sentiment and the Dollar’s trajectory:
**1. Core PCE Price Index (Friday):**
– Widely regarded as the Federal Reserve’s preferred inflationary gauge.
– Core PCE excludes volatile food and energy components, providing a ‘cleaner’ read on underlying inflation.
– Consensus expectations hover around a modest month-on-month increase, signaling modest but persistent inflationary pressures.
– If the index surprises to the upside, the likelihood of further Fed rate hikes could rise, strengthening the Dollar and putting pressure on GBP/USD.
– Conversely, a cooler-than-expected reading may reinforce prospects for rate cuts in 2025, lending support to the Pound.
**2. Q2 GDP Second Estimate (Thursday):**
– An update to the preliminary second-quarter growth figures, with markets on alert for any substantial revisions.
– Stronger GDP growth would reinforce the narrative of a resilient U.S. economy, making the Dollar more attractive.
– A downward revision could spark concern about the Fed’s policy lag effects and reinforce dovish bets.
– Markets are likely to scrutinize consumer spending and business investment components.
**3. Jackson Hole Economic Symposium (through the week):**
– Central bankers from around the world gather for the Federal Reserve’s annual conference in Jackson Hole, Wyoming.
– Traders will dissect any remarks from Chair Jerome Powell and peers for insights on the future rate path.
– Historically, market volatility tends to increase around the symposium due to unexpected policy signals or rhetoric shifts.
#### British Pound: Countervailing Forces at Home
While U.S. data will dominate global currency risk appetite, the Pound’s own domestic narrative is also evolving:
– The UK consumer price index shows inflation moderating but remains well above the Bank of England’s 2 percent goal.
– Labor market data depicts a gradual cooling, but wage growth is still robust, complicating the Bank’s policy calculus.
– Bank of England Governor Andrew Bailey, in recent comments, emphasized the challenge of achieving price stability without derailing growth.
– Markets are pricing in the possibility of rate cuts in 2025, conditional on inflation continuing its steady descent.
– Data on UK retail sales and business activity, due early in the week, could set the stage for Sterling’s performance.
#### Forecast Scenarios: What Might Happen Next?
Given this complex
Read more on GBP/USD trading.