**Turning Point for Pound Sterling? Pound to Dollar Forecast Update**
*By James Fuller, currencynews.co.uk*
*Original article: [Turning Point for Pound Sterling? Pound to Dollar Forecast Update](https://www.currencynews.co.uk/forecast/20250720-43583_turning-point-for-pound-sterling-pound-to-dollar-forecast-update.html)*
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### Recent Performance of the Pound Sterling
In the ever-volatile landscape of Forex, the British Pound Sterling (GBP) faces a critical juncture versus the US Dollar (USD) in July 2024. Over the past several weeks, GBP/USD has exhibited broad fluctuations—dipping to lows not seen since the early part of the year before mounting a modest recovery. The currency pair’s latest movements are heavily influenced by shifting expectations surrounding central bank policies, a slew of incoming UK economic data, and the persistent global uncertainties that have rippled across both sides of the Atlantic.
The Pound has generally traded in a range between $1.25 and $1.28 over recent months but has repeatedly struggled to break through resistance near the upper end. Instead, the currency has been weighed down by a combination of economic softness at home and the enduring strength of the US Dollar, fueled by American economic resilience and the Federal Reserve’s firm policy stance.
Key GBP/USD levels witnessed recently:
– **Lows:** Below $1.2600 in June, dipping toward multi-month support
– **Highs:** Attempts to push above $1.2800 faltered in both May and early July
Although GBP has rebounded in select sessions, the broader view suggests the pair is searching for a clear direction, with the possibility of a significant turning point looming as markets reassess the policy outlooks for both the Bank of England (BoE) and the US Federal Reserve (Fed).
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### Market Drivers: Central Bank Policy and Divergence
Central bank divergence remains the defining theme for GBP/USD. Markets are keenly focused on when—rather than if—the BoE and the Fed will cut interest rates. This expected “pivot” is highly consequential for FX markets, as it will shape relative yields and capital flows between the United Kingdom and the United States.
#### Bank of England Outlook
The BoE has maintained a higher-for-longer stance on interest rates in 2024, with base rates held steady at 5.25 percent, the highest level in more than a decade. Policymakers have repeatedly signaled they will only ease once there is clear evidence that inflation has been tamed.
– Recent UK inflation data have shown steady moderation, but the decline has been slower than in the United States or Eurozone.
– Wage growth remains elevated, putting pressure on services inflation.
– The labour market is showing tentative signs of cooling, but is still not at levels that would warrant immediate loosening according to many MPC members.
Forward guidance remains conditional, stemming from concerns that UK inflation, particularly in services, could prove sticky. As such, while rate cuts are increasingly expected this year, there is considerable uncertainty over timing, with many analysts now pushing back expectations for a first move to late summer or even early autumn.
#### Federal Reserve Position
Across the Atlantic, the Federal Reserve has shown more caution in telegraphing rate cuts. While the Fed funds rate is at 5.25 to 5.50 percent, robust US economic data have repeatedly surprised markets to the upside.
– US inflation has slowed, but recent prints have consistently beaten expectations.
– The labour market remains particularly strong, with job creation and wage growth running higher than forecast.
– Fed officials are insisting on “greater confidence” that inflation is heading sustainably to 2 percent before cutting.
Consequently, markets are repeatedly pushing out bets on the Fed’s first rate cut, now seeing a possibility only from September onward and less than two full cuts expected through year end. The relative strength of the US economy and waning prospects of imminent Fed easing continue to underpin
Read more on GBP/USD trading.