US Dollar Forecast: Week of 21 September 2026 — US Rates Now Above Bank Rate

GBP/USD is forecast to trade between 1.3200 and 1.3500 in the week of 21 to 25 September 2026, and GBP/EUR between 1.1550 and 1.1750. US interest rates now sit above Bank Rate after the Federal Reserve raised its range to 3.75–4.00%, having been below it a fortnight ago. No major decisions this week: flash PMIs on Wednesday and a wall of central bank speakers set the tone.

What happened to the pound last week?

It fell, and the reason is structural rather than dramatic. On European Central Bank reference rates, GBP/USD dropped from 1.3508 on 11 September to 1.3344 on 18 September — a fall of about 1.2% across the week. GBP/EUR was almost unchanged at 1.1644.

All three central banks did what was expected of them, and the pound still lost ground. The Federal Reserve raised the target range by a quarter point to “3-3/4 to 4 percent” in a unanimous 12–0 vote, saying the move “will support a timelier return to the Committee’s 2 percent goal”. The Bank of England maintained Bank Rate at 3.75% in a 6–3 vote, with Megan Greene, Catherine L Mann and Huw Pill again preferring 4.00%. The Bank of Japan raised its policy rate to 1.25%.

Three moves, no surprises, and sterling lower against the dollar. That is what a rate differential does when it turns.

US rates are now above Bank Rate — and the Fed’s own projections keep them there

The Fed’s new range of 3.75–4.00% has a midpoint of 3.875%. Bank Rate is 3.75%. US policy rates now sit 12.5 basis points above UK ones, having been 12.5 basis points below them a fortnight ago.

The more useful detail is in the numbers published alongside the decision. The September Summary of Economic Projections puts the median federal funds rate at 4.1% at the end of 2026, 4.1% at the end of 2027 and 3.9% at the end of 2028.

Read that carefully. From a midpoint of 3.875% today, a median of 4.1% at year-end implies one further quarter-point rise across the two remaining 2026 meetings. And the identical 4.1% median for the end of 2027 implies the committee expects to sit at that level for the whole of next year — no cuts at all. The Fed is not projecting a peak followed by relief; it is projecting a plateau.

For anyone buying dollars with sterling, that is the single most important thing to come out of last week, and it is why our GBP/USD forecast and USD outlook for 2026 now carry a firmer dollar bias than they did in the summer.

Will the dollar go up this week?

It may drift rather than jump. There is no Federal Reserve, Bank of England or ECB decision this week, and the only rate announcement is the Swiss National Bank on Thursday morning. The calendar is instead dominated by officials explaining last week’s decisions.

GBP/USD may trade broadly between 1.3200 and 1.3500. Wednesday’s flash purchasing managers’ indices are the week’s only first-tier data — the euro area from 08:15, the UK at 09:30 and the US at 14:45 — and they are the first read on how each economy is behaving since the rate rises landed. The dollar index outlook covers the broader trade-weighted picture.

Why did the Bank of England hold with inflation at a five-month high?

Because its labour market is going the other way. UK inflation rose to 3.1% in the 12 months to August 2026, with core CPI at 2.6% and CPIH services inflation unchanged at 3.6%. On its own, that is a case for tightening.

Against it: UK unemployment was 4.9% in May to July 2026, regular pay growth 3.5%, and payrolled employees fell by 101,000 over the year — a wider annual fall than the 78,000 reported a month earlier. A committee watching employment shrink while prices rise is a committee that splits, and it did: 6–3, for the third consecutive meeting.

This week the market hears from the majority side directly. Sarah Breeden and Swati Dhingra speak on Thursday at 10:30 and Clare Lombardelli at 15:00 — all three voted to hold. Whether their language has hardened since the 3.1% print is the most useful UK signal available before the next Bank of England decision on 5 November, which comes with a Monetary Policy Report. Our GBP forecast tracks the policy path.

The Bank of Japan just demonstrated something worth knowing before any rate decision

On Friday the Bank of Japan raised its policy rate to 1.25%, the highest in 31 years, in a 7–2 vote. The yen fell roughly 0.5%, to around 156.75 against the dollar.

A currency weakening on a rate rise looks wrong until you separate the decision from the guidance. The increase was expected and therefore already in the price; what moved the market was the absence of a clear signal that another would follow soon. Investors positioned for faster tightening unwound those positions.

The practical lesson for anyone timing a transfer around a central bank meeting is that the decision is rarely the thing that moves your rate. The expected outcome is priced days or weeks ahead. What is not priced is the tone of the statement and what the projections imply — which is precisely why the Fed’s flat 2027 median matters more than the quarter point it delivered. Our GBP/JPY forecast covers the yen in detail.

GBP/EUR and EUR/USD forecast

GBP/EUR may hold a 1.1550 to 1.1750 range this week, having finished last week at 1.1644 on ECB reference rates. The euro’s own position is settled for now — the ECB raised its deposit rate to 2.50% on 10 September and does not meet again until late October — so the pair is largely a story about UK data and UK speakers.

EUR/USD may trade between 1.1350 and 1.1600, having been fixed at 1.1460 on 18 September. With the Fed now above the ECB by a wide margin and projecting a plateau rather than cuts, the burden of proof sits with the euro. President Lagarde speaks twice early in the week — Monday at 16:00 and Tuesday at 13:00 — and Wednesday’s euro area PMIs are the data. The pound to euro forecast, euro outlook and EUR/USD forecast carry the longer view, and the live currency converter shows the mid-market rate now.

The economic calendar this week at a glance

All times are UK (BST).

Release timings and speaker diaries are as scheduled at the time of writing and can change.

What is the three to twelve month outlook for the pound?

The next decision points are the Federal Reserve on 27–28 October, the ECB on 28–29 October, and the Bank of England on 5 November with a Monetary Policy Report. On the Fed’s own median projection, one more US rise is expected before the year ends.

Sterling’s position from here rests on whether the Bank of England’s majority shifts. Three members have now voted for 4.00% at three consecutive meetings; it takes two more to change the outcome. UK inflation at 3.1% argues one way, a labour market shedding 101,000 payrolled employees over the year argues the other, and retail sales rose 0.5% in August, which does not obviously help the doves.

None of this is settled. A single surprising release, a shift in energy prices or a change in the geopolitical backdrop can move a major pair by more than a cent in a session, and a forecast is a framework for planning rather than a statement of where the rate will be on any given day. The currency forecast hub carries the pair-by-pair ranges.

What does this mean for your currency transfer?

Last week’s move is the point. A 1.2% fall in GBP/USD across five sessions, on a £400,000 transfer, is about $6,500 of difference — and nothing unexpected happened. Every decision landed as forecast.

Across this week’s forecast range the gap is wider. Converting GBP/USD at an illustrative 1.3500 rather than 1.3200 turns £400,000 into $540,000 rather than $528,000 — $12,000 on the same pounds. On the euro side, 1.1750 rather than 1.1550 gives €470,000 against €462,000, a gap of €8,000. For anyone completing a property purchase in Spain or funding a dollar settlement in the United States, that is the cost of leaving the timing to chance.

How can you manage the risk in a quieter week?

A week without decisions is often the better week to act, not the worse one. A forward contract fixes today’s rate for settlement up to twelve months ahead, which is worth considering while the calendar is quiet rather than in the hour after a central bank speaks. A market order targets a level you would be content to trade at and executes if the market reaches it, including outside UK hours.

Splitting a large requirement into tranches spreads the exposure across several sessions rather than resting it on one moment. Which approach fits depends on your deadline and how much movement you can absorb, not on a view about the rate.

Frequently asked questions

Will the dollar rate increase this week?

The dollar starts the week with a yield advantage it did not have a fortnight ago: US rates now sit above Bank Rate. But there is no Federal Reserve, Bank of England or ECB decision this week, so movement is likely to come from Wednesday’s flash PMIs and from central bank speakers rather than from a policy event. GBP/USD may trade between 1.3200 and 1.3500.

What did the Federal Reserve do on 16 September 2026?

It raised the target range for the federal funds rate by a quarter point to 3.75–4.00% in a unanimous 12–0 vote, saying the move would support “a timelier return to the Committee’s 2 percent goal”. Its Summary of Economic Projections put the median federal funds rate at 4.1% at the end of both 2026 and 2027.

Did the Bank of England raise rates in September 2026?

No. The Monetary Policy Committee maintained Bank Rate at 3.75% on 17 September 2026 in a 6–3 vote, with Megan Greene, Catherine L Mann and Huw Pill preferring a rise to 4.00%. The next decision is 5 November 2026, alongside a Monetary Policy Report.

Why did the pound fall against the dollar last week?

Because the interest rate gap moved against it. The Federal Reserve raised rates while the Bank of England held, taking the US midpoint to 3.875% against Bank Rate at 3.75%. On ECB reference rates GBP/USD fell from 1.3508 to 1.3344 across the week, about 1.2%.

Why did the yen fall after the Bank of Japan raised rates?

The increase to 1.25% was widely expected and therefore already reflected in the price. What moved the market was the absence of a clear signal that another rise would follow soon, which prompted investors positioned for faster tightening to unwind. It is a reminder that guidance usually moves a currency more than the decision itself.

Is now a good time to buy dollars?

That depends on your deadline rather than on a forecast. Sterling is weaker against the dollar than it was a month ago, and the Fed’s own projections imply rates staying near current levels through 2027 rather than falling. If you have a dollar payment due, the practical question is how much further movement you could absorb before it becomes a problem.

What is the minimum transfer Cambridge Currencies handles?

Cambridge Currencies works with transfers from £5,000 upwards, at competitive rates compared with high-street banks. Every transaction is completed by phone with a dedicated specialist, and the firm operates with FCA-authorised partners Currencycloud and ScioPay.

Speak to a specialist while the calendar is quiet

If you have a dollar or euro payment due this autumn — an overseas completion, a business settlement or a large one-off transfer — a week without central bank decisions is a good week to decide how you want to handle it. Speak to a Cambridge Currencies specialist about your timing, or call 01223 608232. Every transfer is handled personally, over the phone, by a dedicated dealer who knows your deadline.

Related guides

• Weekly currency forecast archive — published every Sunday
• Should I buy US dollars now? — how to weigh a deadline against a rate view

Sources: Federal Reserve — FOMC statement, 16 September 2026; Federal Reserve — Summary of Economic Projections, September 2026; Federal Reserve — FOMC calendar; Bank of England — September 2026 Monetary Policy Summary and minutes; Bank of England — upcoming MPC dates; Office for National Statistics — Consumer price inflation, August 2026; Office for National Statistics — Labour market overview, September 2026; Office for National Statistics — Retail sales, August 2026; European Central Bank — monetary policy decisions, 10 September 2026; European Central Bank — euro foreign exchange reference rates; Bank of Japan decision and yen reaction, reported 18 September 2026. Release timings are as scheduled at the time of writing.