Recently, while researching the outlook for the British pound, I found this topic to be quite interesting. Many people are asking whether the pound is still worth paying attention to, especially against the backdrop of global de-dollarization.

First, let’s talk about the pound’s position. As the world’s fourth-largest trading currency, the pound accounts for about 13% of daily forex market trading volume, after the US dollar, the euro, and the Japanese yen. The pound vs. the US dollar (GBP/USD) is also one of the most actively traded pairs among forex investors—good liquidity and tight spreads are exactly why so many people focus on it.

But to be honest, the pound hasn’t had an easy time in recent years. Since the 2008 financial crisis, the pound has been depreciating steadily. Back then, it was possible to exchange 1.5 US dollars for 1 pound, but by 2022 it even fell to a historical low of 1.03 US dollars. That time was truly brutal—when the UK’s new prime minister rolled out the “mini budget,” the market was in panic, and the pound collapsed. This also reflects the pound’s biggest feature: extremely high political sensitivity. During the 2016 Brexit referendum, the pound plunged that night, falling from 1.47 to around 1.22. As long as there is uncertainty within the UK, the pound tends to drop first to show you.

Here’s an interesting pattern. I’ve noticed that whenever the US enters a rate-hike cycle, the pound is likely to be suppressed, because the US dollar becomes more attractive. But now the situation has reversed—America has started cutting rates, while the UK is still maintaining high interest rates. This reversal in the interest-rate spread is actually beneficial for the pound’s outlook. Since 2023, the Bank of England has been emphasizing the need to maintain high rates long-term to fight inflation, which has provided support for a rebound in the pound.

From the end of 2024 to now, the pound has indeed stabilized somewhat. Even though it hasn’t returned to the glory days of 1.5 in January 2015, it has been oscillating between 1.26 and 1.30—much better than the bottom. The UK’s fundamentals are also improving: the unemployment rate has remained steady at 4.1%, wage growth is strong, and although economic growth is moderate, it isn’t out of control. All of these provide a foundation of support for the pound’s outlook.

The key now is the interest rate spread. As long as the US continues to cut rates while the UK keeps high interest rates, capital will naturally flow into pound-denominated assets. Many institutions predict that if this trend continues, the pound could challenge 1.35—or even higher. The downside risk is that if UK economic data deteriorates and the central bank is forced to cut rates earlier, the pound may test the 1.20 support level again.

If you want to trade the pound, the most active time period is the overlap between the London and New York trading sessions (8 PM to 2 AM Asia time), especially on days when there are Bank of England decisions or GDP announcements—volatility can be particularly high. If you’re bullish on the pound, you can place limit buy orders at support levels and set stop-losses; if you’re bearish, you would do the opposite. The key is to control risk and set stop-loss points reasonably.

Overall, the outlook for the pound depends on a few core factors: the US-UK interest rate spread, UK economic data, and political stability. The current environment is relatively friendly to the pound, but volatility remains high. If you want to participate in pound trading, you need a clear understanding of these logics—not blindly chase the trend. There are market opportunities, but risk management should always come first.