Pound to Dollar Forecast: GBP Major Resistance at 1.38 "Out of Reach"

July 2, 2025 - Written by Tim Boyer

STORY LINK Pound to Dollar Forecast: GBP Major Resistance at 1.38 "Out of Reach"

The Pound to Dollar exchange rate (GBP/USD) strengthened 6% during the second quarter of the year, the strongest performance since 2022.

GBP/USD surged again early on Tuesday and hit 44-month highs just below 1.3790 before a retreat to 1.3725 as stronger than expected US data triggered a dollar recovery.

According to UoB, the GBP/USD outlook remains bullish, but added; “Barring a surge in momentum, the major resistance at 1.3800 is probably out of reach. Support levels are at 1.3710 and 1.3680.”

ING commented; “the dollar has come quite far already and this bear trend probably needs feeding with some macro news.”

In this context, the latest jobs data did not provide that catalyst.

The JOLTS data recorded a notable increase in job openings to 7.77mn for May from a revised 7.40mn the previous month and well above market expectations of 7.35mn.

The data curbed immediate fears over a notable labour-market deterioration and eased pressure for an immediate rate cut, although the key releases will be later in the week with the monthly employment report due on Thursday.


The US ISM manufacturing index edged higher to 49.0 for June from 48.5 the previous month and just above consensus forecasts of 48.8.

Although there was a marginal increase in output, new orders contracted at a faster pace and employment also posted a faster rate of decline for the month while cost pressures remained strong.

ING commented on the overall outlook; “The dollar continues to grind lower in a move probably now best categorised as an orderly dollar bear trend.”

According to Danske Bank the dollar outlook remains negative; “With geopolitical risk premiums receding, the USD's structural decline is back on track. According to the BIS, the USD slide since April is driven by international investors, particularly in Asia, increasingly hedging their USD exposure.”

It added; “We see many reasons to be short USD right now, including the possibility of a new Fed Chair being appointed earlier than expected, the Big Beautiful Bill on 4 July, and the tariff deadline on 9 July. We remain bearish on the USD, both tactically and strategically.”

Morgan Stanley maintains a bearish stance: “Persistent US dollar weakness over the next 12 months was and remains a central theme in our outlook for markets.”

Nathan Hamilton, investment analyst for fixed income at Aberdeen Investments added; "In 2025, the U.S. exceptionalism narrative has been called into question. Treasury auction demand has been under pressure in recent months, and foreign investor appetite has reduced."


UK data did not have a significant impact with markets also looking at trade deals.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown commented; "The UK was first out of the block in terms of getting a deal signed with the United States, although there is still going to be pockets of uncertainty to some sectors."

She added; "Even so, it has again brought more stability in terms of the relationship that the UK has with the U.S. compared to the European Union, where there (are) still no agreements."

Markets will also be watching the House of Commons debate on welfare reforms with a vote due this evening and there are likely to be a notable number of Labour MPs failing to back the Bill.

A government defeat is unlikely, but if it does lose there will be fresh unease surrounding the fiscal position which could hurt the Pound.

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TAGS: Pound Dollar Forecasts