Societe Generale and TD Securities have both released updated forecasts regarding the British Pound (GBP) and the US Dollar (USD), reflecting recent geopolitical and monetary policy developments. Societe Generale’s Kit Juckes highlights that US yields have risen sharply since the conflict with Iran, with 2-year yields increasing by over 6% since the onset of the conflict. Despite this, the Dollar’s appreciation has been relatively modest, as interest rates have also risen in other regions. Societe Generale projects a weaker Pound against the Dollar into 2026, setting their end-2026 GBP/USD forecast at 1.32, below the Bloomberg consensus of 1.35. Their end-2026 DXY and EUR/USD forecasts are 98.6 and 1.16, respectively, compared to Bloomberg’s 96.7 and 1.20 [1].
TD Securities, meanwhile, has revised its Federal Reserve outlook, now expecting no rate cuts in 2026 and anticipating that the next FOMC move will still be a cut rather than a hike. The bank cites persistent inflation pressures, with core CPI and PCE inflation projected to end 2026 higher than at the start of the year. TD Securities expects a hawkish shift in the June Summary of Economic Projections (SEP) and predicts that the FOMC will drop its easing bias, a move likely to be supported by incoming Fed Chair Warsh. Despite the Fed’s on-hold stance, TD Securities maintains a gradual downward forecast for the USD in 2026, citing asymmetric risks related to Iran and the Fed’s relatively less hawkish stance compared to global central banks [2].
Both institutions point to the ongoing Iran conflict as a key factor influencing interest rates, inflation, and currency forecasts. Societe Generale emphasizes that while US rates have moved in the Dollar’s favor, the advantage is only modest, supporting their view of a softer Pound versus the Dollar. TD Securities, on the other hand, sees the Fed’s hawkish shift and the removal of the easing bias as supporting relative Dollar resilience, though they still expect a gradual decline in the USD over the course of 2026 [1][2].
Market implications from these forecasts suggest continued pressure on the Pound and a more resilient, though not strengthening, Dollar. Both banks highlight the importance of geopolitical developments and central bank policy shifts in shaping currency trajectories through 2026 [1][2].
CONCLUSION
Societe Generale and TD Securities both anticipate a softer British Pound against a relatively resilient US Dollar through 2026, driven by rising US yields, persistent inflation, and a hawkish Fed policy stance. While the Dollar is expected to remain supported in the near term, both banks foresee only modest appreciation, with TD Securities still projecting a gradual USD decline later in 2026. Geopolitical tensions and central bank actions remain key variables for currency markets.