Bank Of America Forecast: Dollar Outlook Dims, Long-Term GBP/USD Target 1.56 - Exchange Rates Org UK
The recent outlook from Bank of America indicates a bearish sentiment towards the U.S. dollar, predicting a long-term target of 1.56 for GBP/USD. This forecast aligns with a broader expectation among several banks that the GBP will strengthen against the dollar, capitalizing on anticipated economic shifts and potential policy adjustments.
What the desk is arguing
The desk reflects a cautiously optimistic view on GBP/USD, prompted by Bank of America's dimmed outlook for the dollar. With a current spot at 1.3100, the trajectory for GBP is influenced by various macroeconomic factors, suggesting upward movement towards consensus targets over the next year.
Specifically, the consensus median target suggests GBP/USD could reach 1.3500 by March 2026 and 1.4000 by December 2026. This aligns with the long-term bullish sentiment expressed by Bank of America, reinforcing the rejection of a more bearish outlook on the pound amid evolving economic dynamics.
Where it sits in our coverage
Currently, the consensus target for GBP/USD is 1.3500 for March 2026, with a range spanning from 1.3300 to 1.3800. This position slightly diverges from Bank of America's projection, which suggests a more moderate increase with targets of 1.3400 in March and 1.4000 by December 2026.
Notably, other firms also express similar bullish views on GBP/USD for December 2026: - JPMorgan: 1.3600 - Barclays: 1.4100 - Deutsche Bank: 1.4200
How other firms see it
The general sentiment among other major firms like Goldman and Morgan Stanley displays a cautious outlook towards GBP/USD with marginally lower targets for March 2026. However, Morgan Stanley in particular anticipates a stronger push towards 1.4700 by December 2026, demonstrating some alignment with the long-term forecasts from Bank of America.
- Goldman: Mar26 target at 1.3300, Dec26 at 1.3600
- Morgan Stanley: Mar26 at 1.3800, Dec26 at 1.4700
- MUFG: Mar26 at 1.3500, Dec26 at 1.4000
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Bank of America's target of 1.56 for GBP/USD signals a bearish outlook for the dollar.
- 02Consensus forecasts for GBP/USD suggest a gradual strengthening towards 1.4000 by December 2026.
- 03Many firms maintain bullish targets, with several predicting GBP/USD could reach up to 1.4700 by the end of 2026.
Market implications
The shift in expectations regarding the dollar's value could lead to increased volatility in forex markets, especially if economic data starts to support a stronger GBP. Investors should monitor economic indicators and central bank communications closely as they may impact currency strategies around GBP/USD.
Risks to this view
Risks to this outlook include stronger-than-expected U.S. economic data or aggressive tightening from the Federal Reserve, which could support the dollar and undermine GBP strength. Additionally, geopolitical developments or unexpected shifts in UK economic policies may also influence GBP valuations.
GBP/USD — All Desk Targets
| Firm | Stance | YE 2027 |
|---|---|---|
Goldman Sachs | Bullish | 1.3600 |
UOB | Bullish | 1.3445 |
Citi | Bearish | 1.2400 |
Sources & References
How we cover this story
Cross-firm research
GBP/USD Consensus Check: 1.35 Target, 0.73% Below Spot — Week of July 11, 2026
Cable trades at 1.3402 against a 21-firm median Dec-26 target of 1.35, leaving spot just 0.73% shy of consensus with a 0.23-figure dispersion range.
GBP/USD: Consensus Targets 1.35 but Morgan Stanley Sees 1.47
Cable trades at 1.3402, just 0.73% below the 21-firm median Dec-26 target of 1.35, but a 0.23 spread signals deep disagreement on the BoE-Fed rate path.
GBP/USD Consensus Check: 1.35 Target, 0.23 Spread — Week of July 10, 2026
Cable trades at 1.3402, just 0.73% below a 21-firm median Dec-26 target of 1.35, but a 0.23 dispersion signals deep disagreement on the BoE-Fed divergence trade.