Business Environment Profiles - United Kingdom
Exchange rate - US dollar per pound
Published: 06 March 2026
Key Metrics
Exchange rate - US dollar per pound
Total (2026)
1 $US
Annualized Growth 2021-26
0.5 %
Definition of Exchange rate - US dollar per pound
This report analyses the exchange rate between the Great British pound (GBP) sterling and the US dollar (USD). Figures are quoted in terms of USD ($) per GBP (£), meaning that a rise in the figure represents a stronger comparative pound. The data is sourced from the Bank of England (BoE) in addition to estimates by IBISWorld, with reference to the conditioning assumptions for the sterling effective exchange rate published by the Office for Budget Responsibility (OBR). The figures represent annual averages for each financial year (i.e., April through March). The spot price of the pound sterling in US dollars is determined by the supply and demand of the two currencies, which is in turn predominantly affected by the relative performance of the two economies and differences is monetary policy (i.e., interest rates) and inflation rates. The GBP/USD currency pair is one of the most frequently traded on global foreign exchange markets and, like all money markets, can be relatively volatile. The US dollar is also seen as a "safe-haven" currency, which can also have a significant bearing on the way it trades against other currencies on the global market.
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Recent Trends – Exchange rate - US dollar per pound
Over the five-year period through 2025-26, the GBP-USD exchange rate has appreciated at a compound annual rate of just 0.5%, reaching £1 = US$1.3408, effectively flat over the period, though this masks pronounced year-to-year volatility driven by domestic and global shocks.
Following the vaccine-led recovery of 2020-21, sterling gained ground into 2021-22, with £1 returning US$1.3665 on average (+4.5%), as global investor sentiment remained constructive and appetite for UK assets was firm. This momentum was abruptly disrupted by Russia's full-scale invasion of Ukraine in February 2022, which rekindled safe-haven demand for the US dollar and placed downward pressure on sterling.
The pound faced its sharpest headwinds in 2022-23. UK CPI inflation peaked at 11.1% in October 2022, a 41-year high, eroding purchasing power and business confidence. The BoE responded with an aggressive hiking cycle, raising Bank Rate from 0.1% in early 2022 to a peak of 5.25% by August 2023. Despite this rate support, the pound suffered acutely from the political and fiscal turbulence of September 2022, when then-Chancellor Kwasi Kwarteng's "mini-budget" triggered a sharp GBP sell-off. In 2022-23 overall, the GBP-USD rate depreciated 11.8%, with £1 averaging around US$1.2052. Recovery emerged in 2023-24. Sterling strengthened 5.6% against the dollar in H1 2023, supported by sticky UK inflation sustaining BoE rate-hike expectations, before giving back gains in H2 2023 as those expectations faded and UK growth concerns intensified. On balance, GBP-USD recorded a 4.3% appreciation over 2023-24.
Into 2024-25 and through 2025-26, the pound initially came under renewed pressure, falling to around US$1.2177 in January 2025 amid a resilient US dollar and UK fiscal sustainability concerns. However, the BoE commenced its easing cycle in August 2024, cutting Bank Rate six times through to February 2026 to reach 3.75%. Simultaneously, growing US policy uncertainty under President Trump, particularly the imposition of broad tariffs, structurally weakened the dollar and provided a material tailwind for sterling, lifting GBP/USD to a high of approximately US$1.3789 by mid-2025. Renewed conflict in the Middle East in early 2026, with the US-Iran conflict, led to a strengthening of the dollar as investors flocked to the USD as a safe haven from international market volatility. Overall, the GBP-USD rate is projected to appreciate 5.1% to £1=US$1.3408.
5-Year Outlook – Exchange rate - US dollar per pound
Over the five-year period through 2030-31, the GBP-USD exchange rate is forecast to depreciate ma...
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