GBP forecast: key figures
| Measure | Level | Detail |
|---|---|---|
| GBP/USD | 1.3252 (25 September) | Forecast 1.31–1.37 to end-2026; see the GBP/USD forecast |
| GBP/EUR | 1.1622 (25 September) | Forecast 1.14–1.18 to end-2026; see the pound to euro forecast |
| Bank Rate | 3.75% | Held 17 September, 6–3; next decision 5 November |
| Fed funds range | 3.75%–4.00% | Raised 16 September; next decision 28 October |
| ECB deposit rate | 2.50% | Raised 10 September; next decision 29 October |
| UK CPI inflation | 3.1% | August; services 3.4% |
Is the pound going up or down in 2026?
It depends which currency you measure it against. On ECB reference rates, this is how sterling has moved against eight currencies:
| £1 buys | 2 Jan 2026 | 10 Jul 2026 | 25 Sep 2026 | Pound in 2026 | Pound since July |
|---|---|---|---|---|---|
| US dollar | 1.3443 | 1.3423 | 1.3252 | −1.4% | −1.3% |
| Euro | 1.1469 | 1.1743 | 1.1622 | +1.3% | −1.0% |
| Japanese yen | 210.96 | 217.27 | 208.84 | −1.0% | −3.9% |
| Swiss franc | 1.0662 | 1.0831 | 1.0977 | +3.0% | +1.3% |
| Australian dollar | 2.0080 | 1.9314 | 1.8851 | −6.1% | −2.4% |
| Canadian dollar | 1.8462 | 1.8997 | 1.8743 | +1.5% | −1.3% |
| Indian rupee | 121.25 | 127.96 | 126.98 | +4.7% | −0.8% |
| Chinese yuan | 9.4017 | 9.0932 | 8.8966 | −5.4% | −2.2% |
Across 2026 the picture is mixed. Since July it is not: the pound has fallen against seven of the eight currencies in the table, with the Swiss franc the only exception. That is the pattern you would expect when other central banks raise rates and the Bank of England does not.
What is moving the pound right now?
The Bank of England is holding, for now
The Bank of England held Bank Rate at 3.75% on 17 September 2026 in a 6–3 vote. Megan Greene, Catherine Mann and Huw Pill voted to raise to 4%. The committee judged inflation risks “tilted to the upside, and more so than at the time of the July Monetary Policy Report”. Four of the six members who voted to hold said the case for a rise could build. Our Bank of England rate decision page covers the vote in detail.
UK inflation is rising again on energy
UK CPI inflation was 3.1% in August. According to the Bank’s minutes, around 0.7 percentage points of the 1.1-point overshoot against the 2% target came directly from energy prices. Brent crude reached $106 a barrel on 14 September, and the Bank expects CPI to reach around 3¾% in the fourth quarter and slightly above 4% in early 2027. Higher inflation makes a rate rise more likely, which supports sterling in the short term, but it also squeezes household incomes.
UK growth has held up better than expected
UK GDP grew 0.4% in the second quarter and 0.4% again in July, while unemployment was 4.9% in the three months to July. Stronger activity weakens the argument for waiting and strengthens the case for a rise, which is why the November meeting is live.
The Fed and ECB have both raised rates
The Federal Reserve raised its range to 3.75%–4.00% on 16 September, its first rise since July 2023, and its median projection implies one more this year. The ECB raised its deposit rate to 2.50% on 10 September, its second rise of 2026. With the Bank of England standing still, the midpoint of the Fed’s range (3.875%) is now above Bank Rate, and the gap over the ECB has narrowed to 125 basis points. See our Federal Reserve rate decision page for the US side.
What is the pound to dollar forecast for 2026?
GBP/USD is forecast to trade between 1.31 and 1.37 to the end of 2026. It fixed at 1.3252 on 25 September, close to its 2026 low of 1.3160 in June; the year’s high was 1.3817 in January. A Bank of England rise to 4% in November would restore rate parity with the Fed and could lift the pair. A second Fed rise on 28 October with the Bank of England on hold could push it toward the bottom of the range. Full detail is in our pound to dollar forecast, and the live rate is on the GBP to USD converter.
What is the pound to euro forecast for 2026?
GBP/EUR is forecast to trade between 1.14 and 1.18 to the end of 2026. It fixed at 1.1622 on 25 September, below its July high of 1.1782 but above its February low of 1.1412. The ECB decides on 29 October and the Bank of England on 5 November; whichever moves next will set the direction of the rate gap and the pair. Full detail is in our GBP/EUR forecast, and the live rate is on the GBP to EUR converter.
What could push the pound higher or lower?
| Supporting GBP | Pressuring GBP |
|---|---|
| The Bank of England raises to 4% on 5 November | The Bank of England keeps holding while the Fed and ECB raise rates |
| UK growth stays resilient | Inflation above 4% squeezes spending and growth |
| Energy prices ease | A further energy spike, which hits the UK harder as a net importer |
| The Fed stops after one more rise | The Fed delivers several more rises |
| Stable UK fiscal policy | Renewed UK fiscal or political stress |
These are Cambridge Currencies’ ranges and scenarios as at 25 September 2026. They are not guarantees and rates may move either way. See the currency forecasts hub for the latest view across all pairs.
What is the sterling forecast for 2027?
For 2027 as a whole we expect GBP/USD between 1.28 and 1.40 and GBP/EUR between 1.12 and 1.20. The pound’s case rests on UK inflation above 4% in early 2027 keeping Bank Rate high, or pushing it higher. The case against it is the Fed’s projection of no cuts through 2027 and a possible further rise from the ECB. Our US dollar forecast for 2027 covers the dollar side.
What does the GBP forecast mean for your currency transfer?
Buying property abroad
A completion date near late October or early November sits across three central bank decisions in eight days. On a £400,000 purchase, a 2% move is £8,000 of purchasing power. A forward contract fixes the rate for up to 12 months and removes that event risk from your budget. See our guides to buying property in Spain and transferring large amounts internationally.
Business payments
Businesses paying dollar or euro suppliers face a pound with less rate support than at any point this year. Fixing rates for a quarter or more of forecast payments limits the damage from a move against you. See our guide to how exchange rates affect UK business.
Transfer options
Forward contract: fix a rate now for a payment due later. Limit order: target a better rate that executes automatically if reached. Split your transfer: convert in stages either side of 5 November to average your rate. Each has trade-offs, and which suits you depends on your deadline and how much certainty you need.
Pound forecast FAQs
Will the pound go up in 2026?
The pound could rise if the Bank of England raises rates on 5 November, which three MPC members already support. Without a rise, sterling has less interest rate support than the dollar now that the Fed has raised rates. The forecast to year-end is 1.31–1.37 against the dollar and 1.14–1.18 against the euro.
Why is the pound falling?
Since July the pound has fallen against most major currencies because other central banks have raised rates while the Bank of England has held. The Fed’s rise on 16 September put US rates above UK rates, and the ECB’s rise on 10 September narrowed the gap over euro rates to 125 basis points.
What is the pound to dollar forecast for 2026?
GBP/USD is forecast at 1.31–1.37 to the end of 2026, from 1.3252 on 25 September. The Fed’s 28 October and the Bank of England’s 5 November decisions are the key drivers.
What is the pound to euro forecast for 2026?
GBP/EUR is forecast at 1.14–1.18 to the end of 2026, from 1.1622 on 25 September. The Bank of England–ECB rate gap has narrowed to 125 basis points after the ECB’s September rise.
Will the Bank of England raise interest rates in 2026?
A rise to 4% on 5 November is a live possibility. Three members voted for one in September, four others said the case could build, and the Bank expects inflation to exceed 4% in early 2027. The final 2026 decision is on 17 December.
Is now a good time to transfer money abroad?
The pound is near the bottom of its 2026 range against the dollar and in the upper half of its range against the euro. Three central bank decisions fall between 28 October and 5 November. A forward contract fixes your rate and removes that timing risk. See our guide on whether now is a good time to exchange money.
Moving sterling this autumn? Speak to a Cambridge Currencies specialist about timing your transfer around the October and November decisions. All transfers are completed by phone with a dedicated specialist. We work with FCA-authorised payment partners, Currencycloud (FRN 900199) and ScioPay (FRN 927951), with client funds safeguarded at a credit institution in line with UK safeguarding rules. This article is general guidance to help you make your own informed decision, not a personal recommendation.
