Pound to Dollar Forecast: End to GBP Rebound on Break Below 1.3420

June 22, 2025 - Written by Tim Boyer

STORY LINK Pound to Dollar Forecast: End to GBP Rebound on Break Below 1.3420

The Pound to Dollar (GBP/USD) exchange rate found support above 1.3400 and consolidated close to 1.3500 in New York trading.

The Pound was unable to draw support from the UK data while a net easing of immediate geo-political concerns curbed dollar support as the US appears to have pulled back from an immediate attack on Iran’s underground nuclear facilities.

According to UoB; “On the downside, if GBP breaks below 1.3420 (minor support is at 1.3445), it would indicate that GBP is not rebounding further.”

It expects resistance in the 1.3500-20 range.

Scotiabank is still bullish on GBP/USD, but does note that a loss of momentum is worrying. It added; “In terms of near-term price action, we look to support at 1.3400 and see limited resistance ahead of 1.3550.”

Immediate Middle East concerns eased slightly amid hopes that any delay in sanctioning a US attack on Iran would give diplomacy a chance, but there is still a high degree of uncertainty.

Scotiabank commented; “President Trump appears to want to give diplomacy more time but the mixed messaging highlights the rather capricious and volatile nature of policymaking in this administration.”


The Federal Reserve and Bank of England both decided against changing interest rates this week, but there are huge challenges for both central banks given the global environment.

Saxo chief investment strategist Charu Chanana commented; "Rising oil prices introduce inflation uncertainty at a time when growth is weakening.”

She added; "That makes central banks' jobs much harder — do they ease to support growth or hold back to avoid fuelling inflation? Most seem to be prioritizing growth concerns for now, assuming that crude gains may not be sustained."

UK data illustrated underlying challenges. UK government borrowing increased to £17.7bn in May from £17.0bn last year. Data for the first two months of 2025/26 were still below the March OBR forecast, but there are clear underlying pressures.

RSM economist Thomas Pugh commented; “Looking ahead to the budget in the autumn, the under performance of the economy and higher borrowing costs mean the chancellor may already have lost the £9.9bn of fiscal headroom that she clawed back in March.

He added; “We are pencilling in tax increases of £10-£20bn. The good news is that with interest rates likely to be around 4% at the time of the budget there is plenty of scope for the Bank of England to cut rates to offset the impact of any fiscal consolidation on the economy.”

Elsewhere, retail sales volumes posted a sharp 2.7% drop for May after a revised 1.3% increase for April amid a sharp decline in food sales on the month following a weather-related surge in April.


According to Rabobank there will be quarterly BoE rate cuts; “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, such as in the Middle East right now.”

Rabobank added; The limits of monetary policy may again be explored if Iran makes good on renewed threats overnight to close the Strait of Hormuz. Unfortunately, central banks can’t print oil or gas.”

The US Philadelphia Fed manufacturing index was unchanged at -4.0 for June, compared with consensus forecasts of -2.0 with a slight easing of inflation pressures.

Companies were less confident over the outlook with expectations of stronger upward pressure on prices.

Scotiabank considers that the dollar price action is disappointing; “FX price action suggests the brief push higher in the USD yesterday through trend resistance that has dictated the slide in the index since January has been rejected.”

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TAGS: Pound Dollar Forecasts