Will the Dollar Rise This Week? Currency Forecast, 31 Aug – 4 Sep 2026

GBP/USD is forecast to trade between 1.3350 and 1.3700 in the week of 31 August to 4 September 2026, with the dollar starting on the front foot. Markets now price a Federal Reserve rate rise on 16 September as more likely than not, after Chair Kevin Warsh’s Jackson Hole debut. Friday’s US non-farm payrolls is the week’s decisive release.

Why did the dollar rise at the end of last week?

Because the Federal Reserve’s new chair told the market the next move could be up, not down. In his first Jackson Hole keynote on 28 August, Kevin Warsh said that “inflation is running above our 2 percent target” and that “the Fed’s predominant focus right now should be on prices”. He set a deliberately high bar for patience: “We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do.”

The numbers he cited explain the tone. The twelve-month change in the PCE price index stands at 3.7%, while the six-month change is 4.1% — the shorter horizon running hotter than the longer one, which is the pattern that gives a central bank least comfort. On CME FedWatch pricing, market-implied odds of a quarter-point increase at the September meeting moved from around a third before the speech to comfortably above half after it — reported snapshots ranged from 54% to roughly 60% through Friday afternoon.

That repricing did not come out of nowhere. The minutes of the July FOMC meeting record that “several participants favored an increase of 25 basis points in the target range at this meeting” and that “many participants assessed that policy tightening would likely be necessary if inflation did not decline”. Warsh gave that minority view the chair’s voice.

Will the dollar go up this week?

The dollar may extend its gains this week if the US data cooperates, but Friday’s jobs report is capable of reversing the move in a single afternoon. On the European Central Bank’s daily reference rates, GBP/USD eased from 1.3656 on 21 August to 1.3583 on 28 August, a fall of about half a percent across the week. Those rates are struck at around 13:10 UK time, before Warsh spoke, so they do not capture Friday’s reaction: Reuters reported the dollar index at 99.69 late in the session, up nearly 0.9% on the week and its biggest weekly gain in ten weeks.

For the week ahead, GBP/USD may trade broadly between 1.3350 and 1.3700. The upper half of that range needs a soft payrolls print on Friday; the lower half needs the labour market to look strong enough to make a September hike look safe. Two staging posts come first: Tuesday’s ISM Manufacturing PMI with the JOLTS job-openings count, and Wednesday’s ADP private payrolls alongside the Fed’s Beige Book.

The starting point matters. US payrolls actually fell by 23,000 in July, with unemployment at 4.1% and annual average hourly earnings growth of 3.2%, according to the Bureau of Labor Statistics. A committee weighing a rate rise against a contracting payroll count is a committee that can be moved by one number. Our GBP/USD forecast page tracks the medium-term picture, and the dollar index outlook covers the broader trade-weighted move.

The detail almost nobody is pricing: the rate gap could invert

Sterling has been underpinned against the dollar in part by a yield advantage that is now almost gone. Bank Rate stands at 3.75%. The Fed’s target range is 3.50–3.75%, a midpoint of 3.625%. The gap in sterling’s favour is therefore just 12.5 basis points.

A quarter-point Fed increase on 16 September would lift the range to 3.75–4.00%, a midpoint of 3.875%. If the Bank of England then holds on 17 September, US policy rates would sit 12.5 basis points above Bank Rate. The two decisions fall on consecutive days, so the market would learn both within twenty-four hours.

That is not a forecast that it will happen — it is arithmetic showing how little room is left. Both committees contain a hawkish minority of exactly three. The Bank of England held Bank Rate at 3.75% on 30 July 2026 in a 6–3 vote, with Megan Greene, Catherine L Mann and Huw Pill preferring an immediate rise to 4.00%. The Fed held its range 9–3, with Beth M. Hammack, Neel Kashkari and Lorie K. Logan preferring a quarter-point increase. Whichever minority wins first sets the direction of the differential. Our explainer on how interest rates drive exchange rates sets out the mechanism.

GBP/EUR forecast: does sterling’s rate advantage still hold?

Against the euro the picture is calmer, and the interest-rate cushion is far thicker. GBP/EUR may hold a 1.1550 to 1.1800 range this week. The pair was almost unchanged over the past week on ECB reference rates, at 1.1673 on 21 August and 1.1666 on 28 August.

The ECB has left its deposit facility rate at 2.25%, 150 basis points below Bank Rate, and said it “is not pre-committing to a particular rate path”. Euro area annual inflation was 2.9% in July 2026, with services contributing 1.55 percentage points and energy 0.94 — but inflation excluding energy was only 2.2%, which is why the case for tightening in Frankfurt is weaker than in London or Washington.

The euro-side event this week is Tuesday’s flash estimate of August inflation. A number that confirms the drift up towards 3% would give the hawks on the Governing Council something to work with before the 10 September meeting in Berlin; a softer figure leaves the differential doing the work and could keep GBP/EUR firm. Our pound to euro forecast covers the longer view.

EUR/USD forecast: caught between two hawkish central banks

EUR/USD may trade between 1.1450 and 1.1750 this week, having been fixed at 1.1643 by the ECB on 28 August before the euro gave ground in later trade. The pair is the cleanest expression of the week’s central question, because both sides are being repriced at once: Tuesday’s euro area flash inflation on one side, Friday’s US payrolls on the other.

Of the two, the US number carries more weight, simply because the Fed is the central bank the market now judges closest to moving. The EUR/USD forecast page sets out the six-month framework, and the live currency converter shows where the mid-market rate is now.

The economic calendar this week at a glance

All times are UK (BST). Monday 31 August is the Summer Bank Holiday, so UK markets are closed and liquidity is thin; US markets are open.

Central bank speaker diaries can change at short notice, so the Thursday hearings and Friday’s speech should be treated as scheduled rather than certain.

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

The next fortnight compresses the whole question into eight days. The ECB decides on 10 September, the Fed on 16 September with a fresh Summary of Economic Projections, and the Bank of England on 17 September. Three decisions in eight days, in an order that puts the Fed’s answer in front of the Bank’s.

The UK’s own inflation problem argues against the Bank cutting into that. CPI rose to 2.9% in the twelve months to July 2026, up from 2.6% in June, with core CPI at 2.6% and services inflation on the CPIH measure stuck at 3.6%. Sticky services inflation is the reason the MPC is holding rather than easing, and it could keep sterling’s cushion against the euro intact even as its cushion against the dollar erodes.

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 forecasts are a framework for planning rather than a prediction of where the rate will be on any given day. The full currency forecast hub carries the pair-by-pair ranges and the central bank calendar.

What does this week mean for your currency transfer?

The width of the range is the number that matters, not the direction. On a £400,000 transfer, converting GBP/USD at an illustrative 1.37 rather than 1.34 is the difference between $548,000 and $536,000 — $12,000 on the same pounds, decided largely by what a single Friday afternoon statistic does to Federal Reserve expectations.

The euro equivalent is calmer but not trivial. The same £400,000 at an illustrative 1.18 rather than 1.16 gives €472,000 against €464,000, a gap of €8,000. For a buyer completing on a property purchase in Spain or settling a dollar payment in the United States, that is the cost of leaving the timing to whichever day the funds happen to clear.

How can you manage the risk around Friday’s payrolls?

There are three practical tools for a week with a binary event at the end of it. A forward contract fixes today’s rate for settlement up to twelve months ahead, taking payrolls out of the equation entirely if the requirement is already known. A market order targets a level you would be content to trade at and executes if the market reaches it, including overnight. A rate alert simply tells you when a level is hit and leaves the decision with you.

Splitting a large requirement into tranches is the fourth option, and often the most realistic where a deadline is weeks rather than days away: converting in stages spreads the exposure across several sessions instead of resting the whole amount on one release. Which of these fits depends on your deadline and how much movement you can absorb, not on a view about the rate. Our guide on whether now is a good time to exchange money works through the trade-off.

Frequently asked questions

Will the dollar rate increase this week?

The dollar could extend last week’s gains, and it enters the week with momentum after Chair Warsh’s Jackson Hole speech pushed market-implied odds of a September Federal Reserve rate rise above 50%. Friday’s US non-farm payrolls report at 13:30 UK time is the release most likely to confirm or reverse that. GBP/USD may trade between 1.3350 and 1.3700 across the week.

Is there a Bank of England meeting this week?

No. The Monetary Policy Committee held Bank Rate at 3.75% on 30 July 2026 in a 6–3 vote, and the next decision is 17 September 2026. Bank of England Monetary Policy Report hearings are scheduled for Thursday morning and Governor Andrew Bailey is due to speak on Friday, but neither changes policy.

What is the most important event for the pound this week?

US non-farm payrolls on Friday 4 September. With no UK or eurozone policy decision this week, and with a September Fed rate rise close to a coin toss, the jobs figure and the accompanying average hourly earnings data are the single biggest driver for GBP/USD — and they set the dollar tone that feeds into GBP/EUR as well.

Why would the Federal Reserve raise rates rather than cut them?

Because US inflation has not returned to target. The twelve-month change in the PCE price index stood at 3.7% and the six-month change at 4.1% as of the Jackson Hole speech on 28 August 2026, and the July FOMC minutes record that participants judged inflation risks “skewed to the upside”. Three of the twelve voters already preferred a quarter-point increase in July.

Where is GBP/EUR heading this week?

GBP/EUR may hold a 1.1550 to 1.1800 range. The 150 basis-point gap between Bank Rate at 3.75% and the ECB deposit rate at 2.25% remains the structural support beneath the pair. Tuesday’s euro area flash inflation estimate is the main euro-side risk before the ECB’s 10 September meeting.

Should I buy dollars now or wait until after payrolls?

That depends on your deadline rather than on a forecast. If the payment is due within days, the practical question is whether you can absorb a move of a cent or more against you on Friday afternoon; if it is months away, you have room to plan. A forward contract removes the event risk, a market order targets a level, and splitting the amount spreads the timing. A specialist can talk through which fits your requirement.

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 before Friday’s payrolls

If you have a dollar or euro payment landing in the next few weeks — an overseas completion, a business settlement or a one-off international transfer — a short call before Friday is worth more than a view on the number itself. Speak to a Cambridge Currencies specialist about timing your transfer around this week’s US jobs report, 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
• USD forecast 2026 — the six-month dollar outlook behind this week’s ranges

Sources: Federal Reserve — Chairman Warsh, Jackson Hole keynote, 28 August 2026; Federal Reserve — FOMC minutes, 28–29 July 2026; Federal Reserve — FOMC statement, 29 July 2026; Bank of England — July 2026 Monetary Policy Summary and minutes; European Central Bank — monetary policy decisions, 23 July 2026; European Central Bank — euro foreign exchange reference rates; Office for National Statistics — Consumer price inflation, July 2026; US Bureau of Labor Statistics — Employment Situation, July 2026; Eurostat — euro area annual inflation, July 2026; Reuters — currency market report, 28 August 2026. Economic calendar timings are as scheduled at the time of writing.