Pound to Dollar Forecast: Next up "Psychologically Important 1.40"

June 29, 2025 - Written by Tim Boyer

STORY LINK Pound to Dollar Forecast: Next up "Psychologically Important 1.40"

The US Dollar has continued to dominated global currency markets and has continued to struggle amid an underlying loss of confidence in the US currency with a particular focus on Federal Reserve policy.

The Pound to Dollar (GBP/USD) exchange rate is trading just below 1.3750 and not far below 44-month highs of 1.3770 recorded on Thursday. There is scope for some trimming of GBP/USD longs into the weekend.

Scotiabank noted some worrying signs, but commented; “The 50 day MA (1.3438) remains a critical medium-term level of support and the chart offers little major resistance ahead of the psychologically important 1.40 level.”

It added; “The near-term range is likely to be defined by 1.3600 support and 1.3800 resistance.”

UoB noted the risk of correction; “While GBP could continue to advance, overbought short-term conditions may lead to a couple of days of consolidation first. All in all, the outlook for GBP remains positive, and the next technical objective is 1.3800.”

Dollar developments dominated with no major developments during the day, although traders were monitoring UK budget developments after the U-turn on welfare spending.

As far as US data is concerned, the core PCE prices index increased 0.2% for May compared with consensus forecasts of a 0.1% increase with the year-on-year rate edging higher to 2.7% from 2.6%.


The slightly higher than expected data could discourage centrist Federal Reserve members from backing any near-term cut in interest rates, but rhetoric will continue to be watched closely.

Elsewhere, personal income declined 0.4% on the month with a 0.1% decline for personal spending.

Scotiabank added; “We think risks are tilted squarely towards more immediate and significant dollar losses. The FOMC consensus remains cool on July but speculation of rate cuts will intensify if the run of US data continues to disappoint.”

Monex Europe head of macro research Nick Rees noted the risk of further Fed criticism by the White House and forecast revisions; "I'll be perfectly honest, I'm currently rewriting them in light of what we are seeing right now."

He added; "We had thought the dollar should stabilize around current levels because the macro data is about to turn really quite positive."

Seema Shah, chief global strategist at Principal Asset Management, "Talk about having the next Fed chair announced within the next couple of months, that would be fairly disruptive."

She added; "It brings up the whole concern about the credibility and reliability of U.S. institutions again, which is typically something that people don't like."


Investec commented; "A successor perceived by the market to be more open to accommodating Trump's wishes risks damaging the independence of the Fed in setting policy."

Rabobank also noted potential risks; “An early nomination could make the nominee the “de facto shadow chair” as his comments (only men are reported to be on the shortlist) would carry a lot of weight in the markets regarding monetary policy beyond May 2026 when Powell’s term expires.”

According to Pepperstone's Chris Weston; "For the dollar to see a sustained counter-rally, I would argue we'd need US growth to pick up and implied Fed rate cuts to be repriced -- perhaps with growth data in Europe and China also slowing."

He added; "That doesn’t seem likely in the near term, and as such, rallies in the dollar are likely to be quickly sold off, with the downtrend set to continue."

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TAGS: Currency Predictions Pound Dollar Forecasts