Above: A view of the Goldman Sachs stall on the floor of the New York Stock Exchange. REUTERS/Brendan McDermid/File Photo.

GBP/USD reference rates at publication:Spot: 1.3616Bank transfers (indicative guide): 1.3239-1.3335Money transfer specialist rates (indicative): 1.3493-1.3548More information on securing specialist rates, hereSet up an exchange rate alert, hereAnalysts at Goldman Sachs are looking for the Dollar's rally to stall, an outcome that would open the door to a more sustained recovery in the Pound-to-Dollar exchange rate (GBP/USD).

In a regular weekly currency briefing note the Wall Street bank says the Dollar's run will hit the buffers as a sell-off in global markets fizzles out and investors return their attention to growth.

Such a shift would come as investors adopt a view that a recent surge in global inflation won't deliver an environment of destructive "stagflation", instead the pro-risk "reflation" narrative will win out.

"The broad Dollar has stabilized month-to-date following its sizable rally in September, partly helped by Friday’s weaker-than-expected jobs report. Surging energy prices and the prospects for “stagflation” dominated market focus over the past month," says Zach Pandl, an analyst at Goldman Sachs.

This appreciation in the value of the Dollar was the driving force in a decline in the GBP/USD exchange rate which fell from a high of 1.3913 on September 14 to a low of 1.3520 on September 29.

Global inflationary pressures have jumped amidst ongoing global supply chain bottlenecks and shortages which come alongside rapidly rising energy prices.

This poses headwinds to global growth, driving demand for safer haven assets such as the Dollar during associated episodes of stock market weakness.

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The majority of existing supply-side disruptions remain a legacy of the Covid pandemic and the various responses put in places by governments to stall its spread.

But economists and central bankers for the most part expect the heightened pressures on supply chains and energy markets to ultimately ease as the global health situation improves.

"While inflation pressures may remain firm over the near-term, we would expect the correlation pattern across macro assets to look more consistent with reflation than stagflation," says Pandl.

The global Covid outlook is seen as steadily improving with case rates moving lower in decisive fashion right across the world, which in turn coincides with improved economic data.

Goldman Sachs research finds the Dollar’s performance tends to differ depending on whether higher inflation reflects better growth or other factors, such as adverse supply shocks.

"When inflation is rising because of better growth prospects, the Dollar tends to depreciate against most crosses (JPY is the exception), but when inflation is rising for reasons other than good growth the Dollar tends to appreciate slightly," says Pandl.

Goldman Sachs strategists expect the return of 'good inflation' and hold a bias into year-end for a moderately weaker Dollar.

The Pound-to-Dollar exchange rate is forecast by Goldman Sachs to be at 1.41 on a three month forecast horizon and 1.46 on a six month forecast horizon.