Pound to Dollar Week Ahead Forecast: 1.34-1.36 Range in 2025

June 8, 2025 - Written by Frank Davies

STORY LINK Pound to Dollar Week Ahead Forecast: 1.34-1.36 Range in 2025

Most investment banks see scope for further dollar losses over the next few months, but are doubtful whether the Pound can take much further advantage given domestic uncertainties.

CIBC forecasts that the Pound to Dollar (GBP/USD) exchange rate will trade marginally higher at 1.36 at the end of 2025 with a further advance to 1.41 at the end of next year.

Rabobank expects that GBP/USD will be held at 1.34 on 12 months.

GBP/USD hit 39-month highs just above 1.3600 during the week on dollar weakness before a retreat to around 1.3530.

US jobs data overall continued to suggest a significant weakening, but not enough to trigger expectations of a near-term shift in Federal Reserve policy, especially given upward pressure on prices.

US non-farm payrolls, for example, increased 139,000 for May compared with consensus forecasts of 125,000 while the April increase was revised down to 147,000 from 177,000 reported previously.

There was, however, a sharp employment drop according to the household survey.


ING commented; “On balance, a pretty decent outcome given the weakness seen in the employment components of key business surveys, but the risks are increasingly skewed towards cooler jobs growth in the coming months.”

Uncertainty over US fiscal policy has increased further following the strong criticism of the budget bill by Elon Musk.

There is a greater possibility that opponents to the Bill will feel galvanised and less willing to acquiesce to Trump’s wishes.

Given that markets are wary over proposed taxes on remittances and investments in the US, speculation that the policy will fail in the Senate could potentially support the dollar.

MUFG, however, remains bearish on the dollar; “At the root of the problem are a number of factors including the flip-flopping on trade tariff polices that is creating ongoing uncertainty that will likely impair economic growth as companies and households delay decision-making.”

It added; “as we move into the second half of the year we see renewed trade policy turmoil, a clearer weakening of the labour market and a shift from the Fed to more dovish communications. That will be the catalyst for further dollar depreciation in H2 2025 and into 2026.”

Rabobank is bearish on the dollar outlook; “For years, the robustness of US growth combined with the credibility of its institutions fed the ‘buy America’ trade with savers from all over the world keen to be involved. That has now changed.”


CIBC notes the risk of disinvestment from US assets, but does not expect a flood and added; “These decisions will take time and consideration, and ultimately there are few true alternatives to USD assets at the moment.”

There were no major UK developments during the week with the Bank of England continued to signal a cautious stance on monetary policy.

Officials, however, were slightly more confident that the disinflation process will continue. Markets consider that the chances of an August rate cut have increased to around 60% from 50% previously.

In the week ahead, the latest labour-market data and GDP will be released, together with the government spending review.

According to ING; "Wednesday's spending review will epitomise just how tight things look for UK government departments."

It added; "And life is only going to get harder for the Treasury in the autumn. We think the government's 'headroom' will fully evaporate and that tax rises look increasingly inevitable later this year."

Rabobank added; “the Spending Review is likely to bring a reminder of the fragility of the UK’s fiscal situation and the difficulty that Chancellor Reeves will have in meeting her own rules if growth does not pick up.”

According to CIBC; “Ongoing speculation of fiscal tightening, risks containing consumer sentiment, activity and Sterling gains. Despite ongoing discussions over the ending of USD dominance, we would be wary of anticipating significant further GBP/USD gains.”

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