Pound to Dollar Forecast (Predictions for GBP to USD) - January 2026

If you're planning to send British pounds (GBP) abroad in July, here’s a simple guide to what’s happening with the exchange rate, and what it might mean for your money.

GBP to USD: Where It Stands

Right now, GBP to USD is trading in a broad “back and forth” zone rather than a clean trend. After dipping near 1.30, it rebounded toward the 1.33 to 1.35 area, where the market is now hesitating.

For the next month, the most likely outcome is still a range, with quick swings driven by major UK and US data and central bank messaging.

What’s Driving GBP to USD?

The biggest driver is interest rate expectations, meaning what traders think the Bank of England and the US Federal Reserve will do next.

In the US, the dollar has been softer because markets expect more Fed rate cuts in 2026, and because US yields have fallen. If the Fed sounds comfortable cutting further, the dollar usually weakens and GBP/USD rises.

In the UK, sterling has held up better than feared because inflation is still “sticky” and that can slow Bank of England cuts. But if the Bank of England signals it wants to cut faster in 2026, that usually hurts the pound and GBP/USD falls.

Politics and budgets also matter for the UK. Markets like stability, so any new fiscal headlines that revive uncertainty can quickly knock the pound around even if the big picture stays range-bound.

What Do the Charts Say?

Charts suggest the pair is stuck between strong floors and ceilings.

Key resistance (ceilings):

• 1.3400 to 1.3420: the first major barrier

• 1.3500 to 1.3600: the decision zone for a real breakout

• 1.3700 to 1.3800: likely upper limit if momentum really builds

Key support (floors):

• 1.3350 to 1.3330: near-term “must hold” area

• 1.3275 to 1.3250: important demand zone

• 1.3186 to 1.3200: line in the sand for the recent upmove

• 1.3000: major long-term support

Momentum improved after moving above key moving averages, but there are also signs of “pause risk.” That means rallies can stall and pull back before trying higher again.

What to Watch in the Next Month

The next month is likely to be shaped by a few make or break events.

1. US inflation and jobs dataIf US inflation runs hot or jobs look stronger than expected, the Fed may sound less willing to cut. That would likely boost the dollar and push GBP/USD down toward 1.33, 1.3275, or 1.32.

2. Bank of England messagingA rate cut is often already expected, so the key is the tone. If the Bank of England hints at deeper cuts ahead, sterling could soften even if the cut itself is no surprise.

3. Risk appetiteWhen markets feel calm, the dollar tends to lose some safe haven demand, helping GBP/USD. When fear returns, the dollar can strengthen quickly.

Risks Ahead

A sudden change in US inflation expectations is the biggest risk to this outlook. One upside CPI surprise can flip the market back toward “higher for longer” thinking, lifting USD fast.

On the UK side, weaker growth data or renewed fiscal uncertainty can cap pound strength and make any rallies toward 1.35 to 1.36 harder to hold.

What This Means If You’re Sending GBP to USD Abroad

A higher GBP/USD rate means your pounds buy more dollars, so sending money gets cheaper in GBP terms.

For the next month, expect a choppy market where timing matters. If GBP/USD moves up toward 1.35 to 1.36, that is typically a stronger window to convert GBP to USD.

If the pair slips toward 1.3275 or 1.3200, your transfer will usually buy fewer dollars, so you may want to consider:

• Splitting transfers into 2 to 4 smaller parts

• Using a rate alert near 1.35

• Considering a forward contract if you need certainty on a future payment