Pound to Dollar FX Forecast: "Impressive Gains", Next Target 1.3750

June 25, 2025 - Written by Ben Hughes

STORY LINK Pound to Dollar FX Forecast: "Impressive Gains", Next Target 1.3750

Pound Sterling (GBP) regained territory on Monday as the US Dollar (USD) lost ground and there was a further surge early on Tuesday as geo-political developments dominated.

Rate-cut hints by Chair Powell hurt the dollar further in US trading and the Pound to Dollar (GBP/USD) exchange rate jumped to fresh 40-month highs just below 1.3650.

According to Scotiabank; “the last two sessions have provided GBPUSD with a meaningful recovery and a push back toward its recent multi-year highs from mid-June.”

It added; “We see little additional longer-term resistance ahead of 1.3750.”

UoB is more cautious; “major resistance at 1.3655 is not expected to come into view.”

A ceasefire between Iran and Israel triggered a recovery in risk appetite and oil prices posted sharp losses.

This combination undermined any defensive dollar support and boosted the Pound given its sensitivity to risk conditions.


There is still a high degree of uncertainty surrounding the Middle East situation, but traders appear to want to move on.

Scotiabank commented; “investors appear confident that the uncertainty created by the situation over the past couple of weeks is likely to recede as both parties reduce military posturing.”

Danske Bank noted that there are still risks; “As Israel has already accused Iran of violating the ceasefire, we are not yet fully convinced that the danger is over.”

Interest rate trends will also remain a key element, especially after another round of dovish rhetoric from a Fed official.

According to Governor Bowman, tariffs have not had a big impact on inflation and the Fed should be focussing on a softer labour market.

If the inflation data is well behaved, she considers that the central bank should cut rates at the July meeting.

Bowman’s comments mirrored those from fellow Governor Waller late last week and it is notable that these two have previously been the most hawkish Fed members.


President Trump has again criticised Chair Powell heavily and traders will assume that there is a political dimension two the comments with Fed members jockeying for position and aiming to catch Trump’s eye to be the next chair.

In testimony to Congress, Chair Powell stated that a rate cut could come sooner if inflation is not as strong as expected or the labour market weakens.

Markets see around at least an 80% chance of a September rate cut.

US consumer confidence dipped to -93.0 for June from a revised 98.4 previously and below market expectations of 98.0. Consumers were slightly less confident over the labour market.

As far as UK policy is concerned, Bank of England external member Greene stated that she was worried over the risks of softer growth and higher inflation, a toxic combination for the central bank.

Overall, she continued to back a cautious stance in cutting interest rates.

Deputy Governor Ramsden, however, continued to focus on downside risks.

Dean Turner, chief euro zone and UK economist at UBS commented; "Rate setters view the current policy stance as restrictive and are ready to ease as inflation pressures fade, but we must be prepared for this to take time. We expect the BoE to stick with its quarterly cadence of cuts and deliver 25 bps reductions at its August and November meetings, taking the base rate to 3.75% by year-end."

Scotiabank commented; “Yield spreads are providing GBPUSD with a fundamental lift, largely reflecting renewed dovish expectations for the Fed.”

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TAGS: Pound Dollar Forecasts