GBP/USD Forecast: MUFG foreign exchange analysts say UK resilience keeps Pound supported
Pound Sterling’s August leadership is holding despite less favourable yield spreads, with currency analysts at MUFG pointing to stronger UK consumption, investment and services growth.
The Pound to Dollar (GBP/USD) exchange rate finished the week at 1.3534, close to its August highs after a late burst of Sterling demand carried Cable firmly back above 1.3500.
Friday’s advance left GBP/USD 0.32% higher on the day, while the August high stands at 1.3560.
MUFG thinks that resilience deserves attention.
The bank described Pound Sterling as the “best performing major currency so far in August”, with the latest UK growth figures providing another reason for investors to stay constructive.
The UK economy expanded 0.4% in the second quarter after 0.6% growth in Q1, an outcome MUFG sees as evidence that activity has weathered the energy shock better than feared.
The detail was useful for the British Pound too.
Household consumption grew 0.3% while business investment increased 1.7%.
MUFG also highlighted the renewed expansion in investment since the pandemic, with business investment now around 13% above its level in late 2019.
June provided another encouraging signal. Three-month services growth reached 0.5%, while IT output increased 2.7%, something MUFG linked to stronger AI-related demand.
The chart above shows Pound Sterling has endured several sizeable reversals during 2026, but GBP/USD has recovered above both its 20-day and 50-day moving averages.
Near-Term GBP/USD Outlook: UK Growth Is Offsetting the Yield Story
The more unusual part of the Sterling move is what has not happened.
UK rate expectations have become less supportive.
Softer labour-market signals and weaker inflation pressures have reduced the urgency for the Bank of England to tighten again, while UK yield spreads have shifted in a less favourable direction.
Yet the Pound has “failed to weaken as yield spreads have moved against it”. MUFG sees firmer growth and the still-attractive carry backdrop as important offsets.
That makes the recent GBP/USD move harder to dismiss as simply another interest-rate trade.
The broader bank forecast picture is also interesting.
The near-term bank consensus sits below current GBP/USD exchange rate levels, but median forecasts turn progressively firmer further into 2027 while the range of views remains wide.
With spot around 1.3534, Pound Sterling is already trading above much of the near-term forecast distribution.
That raises the hurdle for further gains, but it also underlines how well the Pound has absorbed a less favourable UK rate story.
MUFG’s argument is that domestic resilience is filling the gap.
If UK growth continues to surprise on the stronger side, the GBP/USD exchange rate may not need widening yield support to remain above 1.35.
Our currency coverage draws on live market data, official economic releases and published bank research.
