Pound to Dollar Price Forecast: "Fundamentally-driven" USD Decline

June 12, 2025 - Written by Frank Davies

STORY LINK Pound to Dollar Price Forecast: "Fundamentally-driven" USD Decline

Latest Dollar Slide Offsets UK GDP Disappointment, GBP/USD Hits Fresh 39-Month High

The Pound to Dollar (GBP/USD) exchange rate dipped sharply after weaker-than-expected UK GDP data, but regained losses as the dollar was subjected to renewed selling in global markets.

After a slide to near 1.3525, there was a surge to the 1.3620 level and just above the 39-month high around 1.3615 recorded on June 5th.

A sustained move above this level would potentially trigger further GBP/USD buying.

Scotiabank, for example, expects gains to 1.40 at the end of the third quarter.

Earlier in the European session, the UK ONS stated that GDP declined 0.3% for April compared with consensus forecasts of a 0.1% decline and the sharpest decline for 18 months.

According to Investec; “April was payback time in UK monthly GDP numbers.”


It pointed to strong activity in March with housing deals ahead of the April stamp duty changes and a surge in exports to beat the introduction of US tariffs.

ING commented; “UK GDP fell faster than expected in April, but these figures have been volatile lately owing to tariff frontloading, coupled with some possible issues with seasonal adjustment. After a strong first quarter, a weaker jobs market and economic uncertainty point to more muted growth rates for the remainder of this year.”

The timing is unfortunate the day after the government spending review with growth and government borrowing intrinsically linked.

MUFG commented; “the large capital spending plans underline the vulnerability. While the spending is outside the fiscal rule related to day-to-day spending, it is still debt that needs to be serviced.”

It added; “With the OBR generous with its growth projections (due to optimistic productivity projections) there is plenty of scope for fiscal slippage. According to the bank; “There has been limited FX reaction but weaker GDP will only reinforce fiscal slippage concerns and increase expectations of a more active BoE in cutting rates.”

According to the bank; “Given current global debt sustainability risks that points to ample downside risks for the pound going forward.”

PwC economist Adam Deasy commented; “Today’s data, a weakening labour market, and worsening business sentiment point to a slowing growth outlook in the near-term and strengthen the case for further rate cuts from the Bank of England.”


The dollar has come under renewed pressure in global markets with selling pressure amid a weaker economy and unease over a shift in capital allocations away from US assets.

Headline and core US producer prices increased 0.1% for May with the core year-on-year increase at 3.0% from 3.2% previously.

Initial jobless claims remained at 248,000 in the latest week, above consensus forecasts of 242,000 while continuing claims jumped to 1.96mn from 1.90mn and the highest reading since late 2021.

ING commented; “The softer US growth trajectory and the restart of the Fed's easing cycle later this year should keep the dollar offered.”

Aviva Investors senior economist and strategist Vasileios Gkionakis noted the structural concerns as investors fret about persistent fiscal deficits, weakening foreign demand for government debt, and institutional uncertainty.

He added; “All this is agitating markets who in order to lend to the US would require a combination of higher yields and a weaker exchange rate.”

Dollar confidence also dipped after the latest trade headlines with reports that the Trump Administration will announce take-it-or-leave-it tariff offers next week.

Tariffs on Chinese exports to the US will be set at 55% while Trump claimed unilateral tariff levels would be released next week.

Scotiabank commented; “The latest USD-negative trade headlines have compounded a fundamentally-driven USD decline.”

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TAGS: Pound Dollar Forecasts