The GBP/USD pair is experiencing a rebound, trading near the 1.3400 mark after facing three consecutive days of declines. As of Monday morning in the Asian session, the exchange rate settled around 1.3390. This recovery occurs as the British Pound (GBP) maintains its strength in anticipation of the upcoming release of the Gross Domestic Product (GDP) data for the third quarter from the United Kingdom (UK).
However, the British Pound could encounter challenges moving forward. Market analysts note that investors have largely anticipated an initial interest rate cut from the Bank of England (BoE) by June 2026. Furthermore, there is a substantial 40% chance that a cut could occur as soon as March, based on data from Capital Edge regarding interest rate probabilities.
On the other side of the Atlantic, the US Dollar (USD) may strengthen. Recent comments from Federal Reserve Chair Jerome Powell suggest that a rate hike is not imminent, as the Fed is currently in a "wait-and-see" mode, closely monitoring incoming economic indicators.
The latest Summary of Economic Projections, often referred to as the "dot plot," reveals that the median forecast indicates just one more rate cut might happen in 2026. The CME FedWatch tool reflects a 79.0% likelihood that the Fed will maintain current rates during its meeting in January, a slight increase from 75.6% the previous week. In contrast, the probability of a 25-basis-point rate reduction has decreased to 21.0%, down from 24.4% last week, signaling shifting market expectations.
Attention is also turning towards US President Donald Trump, who recently stated that the next Chair of the Federal Reserve will be someone committed to significantly lower interest rates. Meanwhile, Fed Governor Christopher Waller, who is considered a candidate for this position, reiterated his dovish views on interest rates at a recent discussion hosted by CNBC.
In today’s market, the British Pound shows a notable performance against various major currencies, as illustrated in the table below. Notably, the Pound has emerged as the strongest currency when measured against the US Dollar.
| | USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF |
|--------|-------|-------|-------|-------|-------|-------|-------|-------|
| USD | -0.04%| -0.12%| -0.09%| -0.05%| -0.13%| -0.11%| -0.08%| |
| EUR | 0.04% | -0.08%| -0.02%| -0.00%| -0.09%| -0.07%| -0.04%| |
| GBP | 0.12% | 0.08% | 0.02% | 0.08% | -0.01%| 0.02% | 0.04% | |
| JPY | 0.09% | 0.02% | -0.02%| 0.04% | -0.04%| -0.03%| 0.00% | |
| CAD | 0.05% | 0.00% | -0.08%| -0.04%| -0.08%| -0.05%| -0.03%| |
| AUD | 0.13% | 0.09% | 0.00% | 0.04% | 0.08% | 0.02% | 0.03% | |
| NZD | 0.11% | 0.07% | -0.02%| 0.03% | 0.05% | -0.02%| 0.03% | |
| CHF | 0.08% | 0.04% | -0.04%| -0.01%| 0.03% | -0.03%| -0.03%| |
This heat map illustrates the percentage changes among major currencies. The base currency is identified in the left column while the quote currency is indicated in the top row. For instance, if you look at the British Pound across to the US Dollar, the percentage change noted in the corresponding box illustrates the GBP/USD exchange rate dynamics.
