The British Pound (GBP) is expected to decline toward 1.3100 against the US Dollar (USD), according to Brown Brothers Harriman’s Elias Haddad, as the United States demonstrates stronger economic growth compared to the United Kingdom. GBP/USD has already given back some of its previous gains related to the US-Iran breakthrough, reflecting the shifting market sentiment [1].
Recent UK economic data has contributed to the Pound's weakness. UK real GDP fell by -0.1% month-on-month in April, reversing a +0.3% increase in March. This marks the first monthly GDP decline since August 2025, primarily due to a -0.2% drop in services output, while production was flat and construction grew by just 0.1% month-on-month [1]. Additionally, PMI data suggest that UK real GDP could contract by -0.2% quarter-on-quarter in Q2, which is below the Bank of England’s (BoE) baseline forecast of +0.1% quarter-on-quarter [1].
Market expectations for BoE rate hikes have diminished, with the swaps curve reducing anticipated hikes over the next twelve months to 40 basis points from 60 basis points the previous day. This adjustment is largely attributed to falling energy prices and is consistent with a broader trend of reduced tightening expectations across major economies [1].
Political uncertainty is also weighing on the Pound. The upcoming June 18 Makerfield by-election is drawing attention, with recent polls showing Andy Burnham holding a 10-point lead over Reform UK. This could pave the way for Burnham’s return to parliament and a potential leadership challenge to Prime Minister Keir Starmer. A Burnham-led Labour government is expected to increase spending and borrowing, which could further undermine UK fiscal credibility [1].
CONCLUSION
The British Pound is under significant pressure due to weaker UK economic data, reduced expectations for Bank of England rate hikes, and rising political uncertainty. Market participants are increasingly cautious, with analysts expecting further downside for GBP/USD as the US economy outpaces the UK. The upcoming Makerfield by-election and potential political shifts add to the risks facing the Pound.