GBP/USD is trading around 1.3460 on Tuesday at the time of writing, down 0.30% on the day. The pair is consolidating after failing to maintain the upward momentum seen last week, which took it to its highest level in more than three months near 1.3535. This pause reflects ongoing hesitation in the US Dollar (USD), as market participants remain cautious ahead of the release of minutes from the latest Federal Open Market Committee (FOMC) meeting.
The US dollar is trading without a clear direction, with the US Dollar Index (DXY), which tracks the US currency against a basket of six major currencies, stable around the 98.10 level. Markets are looking for a more detailed view of the internal discussions at the Federal Reserve (Fed) regarding monetary policy expectations. At its last meeting, the Fed made its third straight rate cut this year, lowering the federal funds target range to 3.50%-3.75%. Updated economic forecasts, including a bullet chart, now point to an interest rate closer to 3.4% by 2026, suggesting just one additional rate cut next year.
This projected path appears more restrictive than what markets are currently pricing in. According to the CME FedWatch tool, investors remain very confident that the Fed will implement at least two additional rate cuts, amounting to a cumulative easing of about 50 basis points by the end of 2026. This divergence between market expectations and official guidance continues to generate contained but persistent uncertainty around the US dollar.
On the British side, the British pound continues to benefit from a relatively supportive backdrop. The currency has remained broadly resilient against its major counterparts in recent weeks, supported by expectations that the Bank of England will proceed cautiously with monetary easing in 2026. At its last meeting, the Bank of England cut interest rates by 25 basis points to 3.75%, while emphasizing that further easing would follow a gradual path.
This cautious stance reflects persistent inflation in the UK. Although headline inflation slowed to 3.2% in November from a peak of 3.8% in September, it remains well above the central bank’s target of 2%. Bank of England Governor Andrew Bailey recently indicated that the scope for further interest rate cuts may be limited as policy approaches its neutral level, making future decisions highly dependent on incoming economic data.
Looking to 2026, the Bank of England’s forecasts will depend largely on developments in the UK labor market and GDP growth. Demand for work remains weak in 2025, as employers reduce hiring to offset higher Social Security contributions, a factor that could continue to weigh on economic momentum.
In the United States, attention is also turning to political developments. US President Donald Trump said he will announce Jerome Powell’s successor as Chairman of the Federal Reserve in January. This decision could impact the outlook for monetary policy, as the next Fed chair is widely seen as favoring a more flexible stance, in line with the White House’s preference for lower interest rates even if financial markets remain strong.
The price of the British pound today
The table below shows the percentage change of the British Pound (GBP) against the major currencies listed today. The British pound was the strongest against the Swiss franc.
| US dollars | euro | GBP | JPY | Canadian | Australian dollar | New Zealand dollar | Swiss franc | |
|---|---|---|---|---|---|---|---|---|
| US dollars | 0.13% | 0.30% | 0.19% | -0.08% | -0.08% | 0.05% | 0.24% | |
| euro | -0.13% | 0.15% | 0.06% | -0.21% | -0.21% | -0.08% | 0.11% | |
| GBP | -0.30% | -0.15% | -0.08% | -0.37% | -0.37% | -0.24% | -0.08% | |
| JPY | -0.19% | -0.06% | 0.08% | -0.26% | -0.26% | -0.14% | 0.08% | |
| Canadian | 0.08% | 0.21% | 0.37% | 0.26% | 0.00% | 0.16% | 0.29% | |
| Australian dollar | 0.08% | 0.21% | 0.37% | 0.26% | -0.01% | 0.13% | 0.29% | |
| New Zealand dollar | -0.05% | 0.08% | 0.24% | 0.14% | -0.16% | -0.13% | 0.16% | |
| Swiss franc | -0.24% | -0.11% | 0.08% | -0.08% | -0.29% | -0.29% | -0.16% |
The heat map shows the percentage changes in major currencies versus each other. The base currency is chosen from the left column, while the counter currency is chosen from the top row. For example, if you select the British pound from the left column and move along the horizontal line to the US dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
