Sterling today: Pound steady as UK GDP beats, dollar firms on CPI bets
September 11, 2026
SACHFS | Forex & Currency Market News
The British pound remained broadly steady on Friday after stronger-than-expected UK economic growth data, while the US dollar strengthened as traders positioned for the latest US inflation report and assessed the possibility of a Federal Reserve interest rate hike next week.
UK GDP Beats Expectations
The UK economy expanded by 0.4% in July, exceeding economists’ expectations and accelerating from the 0.3% growth recorded in June. The increase was supported significantly by the information technology sector, with analysts noting that investment linked to artificial intelligence could be contributing to stronger activity.
Despite the positive UK GDP data, sterling gains remained limited as investors continued to focus on interest-rate expectations, UK bond yields and broader US dollar strength.
GBP/USD traded around 1.3504, while EUR/USD slipped toward 1.1599. The US Dollar Index (DXY) also moved higher as markets prepared for the latest US Consumer Price Index (CPI) figures.
US CPI and Federal Reserve Rate Hike in Focus
The biggest driver for the forex market today is the upcoming US inflation data. Markets have priced in approximately 18 basis points of tightening for the Federal Reserve's upcoming meeting, with expectations centered on a 0.4% monthly increase in headline CPI and 0.2% growth in core CPI.
A stronger-than-expected US CPI report could reinforce expectations for higher US interest rates and potentially provide additional support for the US dollar, while softer inflation could reduce the pressure for further monetary tightening.
Federal Reserve officials remain divided on the outlook. While some policymakers have maintained a relatively hawkish stance, others have indicated that another rate increase may not be necessary if inflation continues to moderate.
Dollar Supported by Treasury Yields and Market Risk
The US dollar has also benefited from its renewed relationship with long-term US Treasury yields. Rising yields can increase the attractiveness of dollar-denominated assets and influence global currency flows.
Recent geopolitical tensions and movements in oil prices have also encouraged a more defensive approach among investors, supporting demand for the safe-haven US dollar.
Analysts continue to see potential for further dollar strength, with the DXY index near the 100 level becoming an increasingly important market focus.
Bank of England Rate Decision Ahead
Attention is also turning toward the upcoming Bank of England interest rate decision. Bank of America expects the BoE to keep interest rates at 3.75%, although some policymakers could argue for another rate increase.
UK government bond yields remain elevated, with the 10-year gilt yield approaching 5.5% and the 30-year yield near 6%. Higher yields are an important factor for sterling investors as markets reassess the future path of UK monetary policy.
Despite stronger UK economic figures, analysts suggest that sterling's recent resilience has not been driven solely by domestic economic fundamentals.
Euro Gains Limited by Dollar Strength
The euro has received some support from a more hawkish European Central Bank outlook. ECB President Christine Lagarde has indicated that additional monetary tightening remains possible, keeping further rate moves under consideration.
However, EUR/USD remains vulnerable to renewed US dollar strength, particularly if upcoming US inflation data strengthens expectations for Federal Reserve tightening.
GBP/USD Forecast and Forex Market Outlook
The near-term direction of GBP/USD is likely to depend on a combination of US CPI data, Federal Reserve policy expectations, Bank of England interest rates, UK economic growth and Treasury yields.
ING currently sees a fourth-quarter target around 1.33 for GBP/USD and 0.87 for EUR/GBP, while maintaining a bearish outlook on EUR/USD.
For forex traders and investors, the next major catalysts will be the US CPI report, Federal Reserve interest-rate decision, Bank of England meeting, UK inflation data and upcoming economic indicators.
What This Means for Financial Markets
A stronger US inflation reading could increase expectations for a Fed rate hike, potentially pushing the dollar higher against major currencies such as the pound and euro. Conversely, weaker-than-expected inflation could reduce rate-hike expectations and provide some relief for GBP/USD and EUR/USD.
For investors, the combination of UK GDP growth, elevated UK gilt yields, US inflation, Federal Reserve policy and geopolitical risk will remain key factors influencing the global currency market.
Market Watch: GBP/USD, EUR/USD, EUR/GBP, US Dollar Index, UK GDP, US CPI, Federal Reserve, Bank of England, UK interest rates, US Treasury yields and global forex markets.