Pound Sterling to Dollar Forecast: 1.35 Defence will Define Near-Term Trend

June 10, 2025 - Written by Tim Boyer

STORY LINK Pound Sterling to Dollar Forecast: 1.35 Defence will Define Near-Term Trend

The Pound to Dollar (GBP/USD) dipped sharply after weaker than expected UK jobs data with lows just below 1.3460.

The data bolstered market expectations that the Bank of England would cut interest rates again at the August meeting and there is a greater risk that several members will look for a back-to-back cut at the June meeting.

The dollar, however, was unable to hold gains in global markets amid expectations of underlying outflows and GBP/USD recovered to around 1.3500.

Goldman Sach is forecasting GBP/USD gains to 1.38 in three months.

According to UoB, a drop below the 1.3500 level increases the risk of a deeper correction and no further test of 1.3615 resistance.

Overall risk appetite has held firm with the FTSE 100 index close to record highs which will help underpin the Pound.

Equity and currency markets are continuing to monitor US-China trade talks which are scheduled to resume in London later in the day.


Saxo Markets strategist Neil Wilson commented; “It’s hoped that the deal with see the US ease export restrictions of chips while China will release its rare earth minerals. A good outcome could send Wall Street to a fresh record high, with the S&P 500 finishing marginally higher on Monday a few points above the 6k level.”

There will, however, be a setback for equities and potentially the dollar if the talks fail to make any headway.

Domestically, the UK unemployment rate increased to a 4-year high of 4.6% from 4.5% in the three months to April, in line with consensus forecasts.

There was evidence of notable weakness in the labour market with the ONS estimating that the number of people on May payrolls declined by a provisional 109,000 after a 55,000 fall in April.

Headline average earnings growth slowed to 5.3% in the year to April from a revised 5.6% and below market expectations of 5.5%.

Underlying earnings also slowed to 5.2% from 5.5% and weaker than the 5.4% expected.

Danske Bank FX analyst Kirstine Kundby-Nielsen commented; "This (labour market data) puts a question mark on the hawkish bias that we've seen from the Bank of England."


She added; "Markets are very firm that we won't get a cut next week, and I think that's definitely the case, but it can open the door when we get to the August meeting."

MUFG was more confident in the near-term Pound outlook; “The dovish repricing of BoE rate cut expectations takes some of the shine of the pound but is unlikely on its own to reverse the recent upward trend unless the BoE signals it is more willing to speed up rate cuts.”

It added; “The pound has been benefitting from the strong rebound in global investor risk sentiment and drop in financial market volatility which is making carry trades more attractive again.”

According to Scotiabank yields risk undermining the Pound; “Fundamentals are offering some stability for the pound but not the basis for support as spreads have fallen back to the lower end of their range. The GBP will need some support from the BoE and a shift in market expectations toward neutral, given that short-term rate expectations are still pricing nearly 40bpts of easing by the end of this year.”

Data releases will continue to be watched closely. Credit Agricole commented; “Ultimately, Thursday’s UK GDP prints for April could be more eagerly awaited, even though they also look poised for potentially large distortions caused by the US tariff threats.”

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TAGS: Pound Dollar Forecasts