Pound Sterling to Dollar Forecast: GBP to "Remain Firm" vs USD over 2025

May 2, 2025 - Written by Frank Davies

STORY LINK Pound Sterling to Dollar Forecast: GBP to "Remain Firm" vs USD over 2025

The Pound to Dollar (GBP/USD) exchange rate was unable to move above 1.3350 on Thursday and retreated to just below 1.3300 after the round of US data.

The releases were certainly soft, but markets had been braced for even weaker figures which helped trigger dollar short covering.

Scotiabank still considers that the overall tone is one of consolidation; “The trend is bullish, given the sequence of higher highs and higher lows since March. The RSI has softened somewhat, but waning momentum is not enough to violate the bull trend. For now, we highlight the recent range and GBPUSD’s movement roughly bound between the mid-1.32s and mid-1.34s.”

Confidence in the US economy remains fragile and the latest labour market data triggered some alarm. re were some concerns.

Initial jobless claims increased to 241,000 in the latest week from 223,000 previously while continuing claims jumped to 1.92mn from 1.83mn in the previous week and the highest level since November 2021.

There was, however, some relief surrounding the business confidence data.

The ISM manufacturing index edged lower to 48.7 for April from 49.0 previously, but this was above consensus forecasts of 47.9.


The production index hit the lowest level since May 2020, but new orders and employment declined at slightly slower rates for the month.

The monthly jobs report is due on Friday.

According to MUFG; “A much weaker nonfarm payrolls report tomorrow poses the main downside risk for the US dollar‘s recent tentative rebound.”

ING added; “The reduction in dollar risk premium may have a little further to go, but may run into the bearish headwind of US data.”

Scotiabank also notes the importance of data; “The sharp decline seen in the USD so far suggests this may not be a “typical” year for the USD but persistence in the soft USD tone would fit with the outlook for slower growth, lower corporate earnings and continued diversification away from the USD in the next few months.”

UBS does see the risk of a more substantial GBP/USD correction; "We expect the pound to remain firm against the U.S. dollar over the course of the year, though some short-term setbacks may occur following the recent rally."

UK data was mixed with the PMI manufacturing index remaining in contraction territory while there was a jump in March consumer lending ahead of the Stamp Duty changes.


Rabobank is cautious over the UK growth outlook. A growth agenda is a good thing, but the British government’s history of announcing grand strategies with much fanfare and little follow-through casts a long shadow.

There are strong expectations of a Bank of England rate cut next week and Rabobank noted the potential for more dovish guidance given concerns over the growth outlook.

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TAGS: Currency Predictions Pound Dollar Forecasts