Bank of America
FX Outlook 2026: Structural Dollar Headwinds
LIVE5 December 2025USD bearish
Back to CurrenciesBullish
GBP/USD
Sterling's fiscal clarity premium
BofA Forecast Path
Cross-Firm Forecast Comparison
Key Drivers
Fiscal clarity
BoE rate path
Growth momentum
EUR/GBP dynamics
Carry advantage
All Firm Targets (Dec '26)
MSStrongly Bullish1.4700
DBBullish1.4200
BARCBullish1.4100
BofABullish1.4000
MUFGModerately Bullish1.4000
JPMTactically Bullish1.3600
GSModerately Bullish1.3600
INGModerately Bullish1.3600
Key Issues for 2026
1.UK budget provided fiscal clarity
2.BoE relatively hawkish in G10
3.Growth resilience surprising to the upside
4.Attractive carry in G10 context
5.GBP outperformance vs EUR expected
Risk Scenarios
Bullish1.42+
UK growth accelerates, BoE holds longer
Base case1.38-1.40
Steady growth, gradual BoE easing
Bearish1.28-1.30
Fiscal concerns resurface, growth weakens
Analysis Summary
Sterling benefits from fiscal clarity post-budget and attractive carry in G10. UK growth resilience and the BoE's relatively hawkish stance support GBP appreciation. GBP/USD offers compelling risk-reward with 1.40 in reach by year-end.