Will the pound get stronger in 2023?

Our panel of experts shares their predictions on the course of the pound and its strength against the dollar and the euro.

Exchange rates measure the strength of a currency against other currencies and are determined by base rates, trade balance and fiscal policy. The recent base rate rises, the Northern Ireland Protocol and Brexit all affect the British pound, creating uncertainty over the future value. You may even find yourself trying to avoid foreign transaction fees when spending abroad.

Finder consulted a panel of academics, economists and currency experts and asked for predictions on the British pound against the US dollar and the euro over the course of 2023.

Quick overview

  • By the end of 2023, 4 out of 6 (67%) panellists believe the pound will strengthen against the dollar.
  • 5 out of 6 panellists (83%) believe the pound will weaken against the euro by July 2023 (vs the rate of EUR/GBP £0.88 on 27 February 23).
  • 5 out of 6 (83%) panellists believe the Northern Ireland Protocol needs to be resolved in order to have a strong pound against the euro.
  • All panellists (100%) noted that the pound’s strength against the dollar hinges on the approaches of the Bank of England and the Federal Reserve.
  • Best-case scenario prediction for USD/GBP is £0.76, worst-case scenario prediction is £0.94, by the end of 2023.
  • Best-case scenario prediction for EUR/GBP is £0.83, worst-case scenario prediction is £0.96, by the end of 2023.

Meet the panel

Full Name Organisation Title
Gulcin Ozkan Kings College London professor of finance
John Wilson University of St. Andrews professor of banking and finance
Jon Ostler finder.com ceo
Keith Kilcourse finder.com money transfer expert
Alexander Tziamalis Sheffield Hallam Univeristy senior lecturer in economics
Jonas Goltermann Capital Economics senior markets economist

Pound to dollar predictions for 2023

Our expert panel predicted the value of the dollar against the pound in July and the end of 2023. Panellists are split on the short-term outlook for the pound, with 50% predicting it will strengthen by July 2023 (vs the rate of USD/GBP £0.83 on 27 February 23). The average prediction for July 2023 was USD/GBP £0.84.

By the end of 2023, 4 out of 6 (67%) panellists believe the pound will strengthen against the dollar. The average prediction for the end of 2023 was USD/GBP £0.81.

All panellists noted that the pound’s strength against the dollar hinges on the interest rate approach of the Bank of England and its US counterpart, the Federal Reserve.

Expert July 2023 USD/GBP prediction December 2023 USD/GBP prediction
Alexander Tziamalis £0.88 £0.89
Jonas Goltermann £0.90 £0.87
John Wilson £0.80 £0.80
Gulcin Ozkan £0.76 £0.73
Keith Kilcourse £0.87 £0.79
Jon Ostler £0.80 £0.79

Pound to euro predictions for 2023

Our expert panel predicted the value of the euro against the pound in July and the end of 2023. 5 out of 6 panellists (83%) believe the pound will weaken against the euro by July 2023 (vs the rate of EUR/GBP £0.88 on 27 February 23). The average prediction for July 2023 was EUR/GBP £0.92.

By the end of 2023, half of the panel thinks the pound will strengthen compared to its current rate, while the other half thinks the pound will weaken. The average prediction for December 2023 was EUR/GBP £0.91.

5 out of 6 (83%) panellists believe the Northern Ireland Protocol needs to be resolved, in order to have a strong pound against the euro. It was further noted that the euro may decline in value due to fiscal issues in southern European countries.

Expert July 2023 EUR/GBP prediction December 2023 EUR/GBP prediction
Alexander Tziamalis £0.96 £0.99
Jonas Goltermann £0.90 £0.88
John Wilson £0.83 £0.83
Gulcin Ozkan £0.93 £0.95
Keith Kilcourse £0.94 £0.86
Jon Ostler £0.93 £0.93

Will the pound strengthen against the dollar?

Our experts believe that the pound could be close to equalling the value of the dollar by the end of 2023, with an average worst-case scenario of USD/GBP £0.94. If this were to happen it would see the pound weaken by 13% vs the current value of £0.83 (27 February 2023).

All panellists noted the importance of a “higher for longer” approach by the Bank of England compared to the Federal Reserve, for the pound to fare better against the dollar. Senior lecturer in economics Alexander Tziamalis, outlines the best case scenario: “BoE interest rates rise faster than Fed interest rates and then fall less quickly.” According to Keith Kilcourse, money transfer expert at Finder: “The Fed could be forced to lower interest rates by Q4 of 2023 and the US dollar will sell off as a result”, showcasing the important role of the Federal Reserve’s actions on the course of the USD/GBP.

A weakening of the pound against the dollar would be the result of: “Weak central bank intervention and failure by the UK government to follow through on fiscal plans”, according to professor of banking and finance John Wilson.

The average best-case scenario would see the pound strengthen to USD/GBP £0.76. This would see the pound strengthen by 8% vs the current price of £0.83 (27 February 2023).

Scenario Prediction
Best case scenario £0.76
Worst case scenario £0.94
27th February 2023 £0.83

Will the pound strengthen against the euro?

Our experts believe that the pound could almost match the value of the euro by the end of 2023, with an average worst-case scenario of EUR/GBP £0.96. This would be a 9% decrease in value against the value of £0.88 as of 27 February 2023.

All panellists agree that resolving the Northern Ireland Protocol is key to a strong pound against the euro, however, the fiscal situation in southern Europe is an additional contributing factor. Jonas Goltermann, senior markets economist, explains: “renewed concerns around Italy’s fiscal policies could lead to significant downward pressure on the euro”.

According to professor of finance Gulcin Ozkan, the worst case scenario would require the: “UK doing significantly worse than the eurozone in fighting inflation”. Jon Ostler, CEO at Finder UK, explains that the Bank of England may be forced to cut rates due to a less resilient economy, compared to Europe: “Weak economy, employment and housing market could put pressure on BoE to cut rates faster than others”.

The average best-case scenario would see the pound strengthen to USD/GBP £0.83. This would be an increased value of 6% vs the current price of £0.88 (27 February 2023).

Scenario Prediction
Best case scenario £0.83
Worst case scenario £0.96
27th February 2023 £0.88

We asked the panellists about the preconditions for a best- and worst-case scenario for the USD/GBP in 2023.

We asked the panellists about the preconditions for a best- and worst-case scenario for the EUR/GBP in 2023

Click here for more research. For all media enquiries, please contact:

Matt Mckenna
UK communications manager
T: +44 20 8191 8806
matt.mckenna@finder.com@MichHutchison/in/matthewmckenna2

More guides on Finder

Go to site