Pound to Dollar Forecast: Sustained USD Buying Still Lacking

June 19, 2025 - Written by Ben Hughes

STORY LINK Pound to Dollar Forecast: Sustained USD Buying Still Lacking

The Pound to Dollar exchange rate (GBP/USD) dipped sharply towards Tuesday’s European close as risk appetite deteriorated amid speculation that the US would decide to intervene in the Iran/Israel conflict by bombing Iran’s underground nuclear facilities.

Significantly, the dollar secured defensive support as oil prices moved higher again and GBP/USD retreated quickly to 20-day lows near 1.3420, the sharpest one-day slide for over two months.

Middle East tensions will tend to support the dollar, but wider confidence in the US currency has faltered and it failed to sustain buying interest with GBP/USD back above 1.3450.

According to Scotiabank; “the trend remains bullish, despite Tuesday’s pullback.”

It did, however, add; “Significant momentum has been lost however, and further losses from current levels would force a more meaningful reassessment of the technical outlook. For now, we look to support at 1.3400 and resistance around 1.3550.”

According to National Australia Bank (NAB) currency strategist Rodrigo Catril; “The dollar is still a safe haven because of its depth and liquidity, so yes the structural forces are diluting the dollar safe-haven activities, but they’re not eroding them completely.”

He added; “But in a scenario of big risk aversion, the dollar will still gain support but maybe not to the same extent it has managed in the past.”


MUFG argued that any US intervention could lead to a quick ending of the conflict; “With the global backdrop for crude oil looking quite bearish it could prompt a sudden correction lower that would likely see some of this recent moderate dollar strength reverse as well.”

The Federal Reserve will announce its latest policy decision on Wednesday. There are strong expectations that the Fed will leave interest rates at 4.50% given major uncertainty over the impact of tariffs.

The Fed will also release the latest forecast updates for growth and inflation as well as the ‘dot plots’ of interest forecasts by individual committee members.

At the last update, the median call was for two rate cuts this year, but this could be lowered to one in the latest update.

US data had a soft tine with initial jobless claims at 245,000 in the latest week from a revised 250,000 previously while housing starts declined to an annual rate of 1.26mn for May from 1.39mn previously and the second-weakest reading for five years.

ING commented; “The overall message today should be broadly hawkish in our view, with continued caution on easing plans. That can help the dollar find support even if the bullish push from Middle East events starts to falter.”

The Administration response will be watched closely.


According to Scotiabank; “No change in policy and even a mildly hawkish tilt to messaging may heighten the White House’s frustration with the Fed, however.”

Earlier, the latest UK inflation data recorded a decline in the headline rate to 3.4% from 3.5% previously, but slightly above consensus forecasts of 3.3%.

The core rate decline to 3.5% from 3.8% was in line with market expectations.

The services-sector inflation rate declined sharply to 4.7% from 5.4%.

This decline will reassure the Bank of England, but there is still a high degree of uncertainty surrounding the growth and inflation outlook.

At this stage, there are strong expectations that rates will be held at 4.25% this week and traders expect two rate cuts by the end of 2025.

Rob Wood, chief UK economist at Pantheon Macroeconomics is not backing the consensus; “we think one more rate cut this year is the right call because of sticky inflation.”

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Pound Dollar Forecasts