Pound Faces Reassessment as Markets Eye Bank of England Rate Decision

The Pound to Dollar exchange rate (GBP/USD) has been relatively stable around 1.35, as investors await the Bank of England's decision on interest rates.

However, this stability may be short-lived, as markets expect at least three BoE rate hikes by mid-2027 and are pricing in the possibility of a fourth. If the BoE fails to meet these expectations, it could lead to a reassessment of the Pound's value.

SEB forecasts that the GBP/USD exchange rate will edge lower in the short term but gain to 1.40 by the end of next year as the dollar loses ground. ING has a 12-month forecast of 1.32, expecting the Pound to lose value if the BoE does not meet market expectations.