Pound to Dollar Weekly Forecast: Sub 1.40 for Next 18 Months?

June 16, 2025 - Written by Ben Hughes

STORY LINK Pound to Dollar Weekly Forecast: Sub 1.40 for Next 18 Months?

Currency exchange analysts at RBC Capital Markets (RBC) forecast the Pound to Dollar (GBP/USD) exchange rate to remain below 1.40 throughout the next 18 months, despite the dollar's vulnerability.

Scotiabank forecasts GBP/USD gains to 1.48 by the end of 2026.

Both banks expect dollar losses on cyclical and structural grounds, but RBC is more bearish surrounding the Pound outlook.

GBP/USD surged to 39-month highs above 1.36 during the week as the dollar came under sustained pressure. There was a retreat to 1.3520 after Israel’s attack on Iran triggered dollar gains and a slide in risk appetite, but there was a quick rebound to near 1.3600.

Commerzbank looked at the Iran situation; "It is impossible to say how the situation will develop in the coming days. Either way, this is a significant escalation which brings us closer to full-scale war in the Middle East."

It added; "Until the danger of further escalation has passed, safe assets are likely to remain in demand."

The Bank of England and Federal Reserve will both hold the latest policy meetings in the week ahead with rhetoric likely to be a key driver for GBP/USD moves.


There are very strong expectations that the Fed will hold interest rates at 4.50%.

Guidance in the statement and from Chair Powell will be crucial for markets and the dollar.

A more dovish statement would tend to weaken the US currency.

The Administration will continue to put strong pressure on the Fed to lower rates sharply.

Markets are also monitoring Fed appointments closely.

MUFG commented; “President Trump has indicated that he could announce a successor for Chair Powell soon well ahead of his term ending in May 2026. Nominating a successor so far ahead of Chair Powell’s term ending could potentially undermine decision making by the Fed especially if the new nominee publicly begins to actively voice their own opinions on monetary policy before taking over.”

US economic conditions will also remain a key element.


SocGen commented; “With limited room for further negative inflation surprises, we do not expect inflation dynamics to drive the next phase of dollar weakness. Instead, this is likely to be caused by slower US growth in 2H and investment outflows.”

Investment banks continue to debate US structural vulnerability. According to RBC; “In the long-term, we maintain our conviction that USD is on a structural path lower. There are two main drivers, both of which are widely accepted narratives but both of which have further to run.”

It expects Federal Reserve rate cuts and further net capital flows out of US assets.

Scotiabank commented; “we now expect the U.S. dollar to continue to depreciate on an effective basis through 2026.”

UK data was weaker than expected with GDP declining 0.3% for April after a 0.2% March increase.

Headline average earnings growth also slowed to 5.3% from 5.6% and below consensus forecasts of 5.5%.

There are strong expectations that the Bank of England will hold interest rates at 4.25% at the latest policy meeting, but with even more confidence in an August cut.

Rabobank commented; “While the MPC remains divided, there is little impetus to alter its current guidance of “gradual but careful” rate cuts. We continue to forecast a 25 basis-point rate cut in August, followed by another reduction in November.”

It added; “This pace gives the Committee space to assess inflation persistence, labour cost dynamics, the Trump presidency and its Schrödinger’s tariffs, and any new shocks that undoubtedly emerge.”

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TAGS: Pound Dollar Forecasts