Pound to Dollar Forecast: "Mid-performer Among G10" says Bank

July 16, 2025 - Written by Ben Hughes

STORY LINK Pound to Dollar Forecast: "Mid-performer Among G10" says Bank

Pound Sterling has not been able to secure any fundamentals support while the dollar has made further net gains in currency markets. Trade fears have not derailed the currency and high yields, for now, are underpinning the US currency.

The Pound to Dollar (GBP/USD) exchange rate has not been able to make any headway on Tuesday and posted fresh 3-week lows just below the 1.3400 level after the New York open.

A dip below 1.3370 would represent 8-week lows for the pair.

According to UoB; “While further GBP weakness is not ruled out, conditions remain oversold, and any declines are unlikely to reach the major support at 1.3375 (expect 1.3400 to provide support as well).

It added; “To sustain the oversold momentum, GBP must hold below 1.3475.”

Markets are still wary over the underlying fiscal vulnerability, especially given unease over the growth outlook and lack of progress in cutting welfare payments.

Caxton FX strategist David Stritch commented; "That round of cuts left a 5 billion-pound ($6.72 billion) hole in public finances, one which the government seems unconfident in fixing with more cuts. All of this means that the pound is under pressure on the fiscal credibility front, not Liz Truss by any means, but a serious drag on sterling's value."


Bank of England Governor Bailey is due to deliver his Mansion House speech late on Tuesday.

According to Scotiabank; “The release is unlikely to shift expectations for the BoE, where markets are pricing one 25bpt cut at the next meeting on August 7.

It did, however, note; “Recent BoE communication has been dovish, with a specific focus on concerns related to the labor market.”

ING added; “Expect Governor Bailey to reiterate a position – similar to the Fed – that faster easing is possible if the labour market deteriorates.”

In this context, the Pound will be vulnerable if there are hints over faster interest rate cuts following the August meeting.

US interest rates will also inevitably be important for the Pound.

The latest US inflation data recorded an increase in the headline inflation rate to a 4-month high of 2.7% from 2.4% and slightly above consensus forecasts of 2.6%.


Core prices increased 0.2% on the month with the year-on-year rate at 2.9% from 2.8% and slightly below market expectations of 3.0%.

According to Annex Wealth Management Chief Economist Brian Jacobsen; "Tariffs are in the data, but it’s not as devastating as many feared.”

Following the data, markets remained convinced that the Fed would not cut rates in July and markets priced in less than a 50% chance of a September move compared with over 60% ahead of the data.

According to Peter Cardillo, Chief Market Economist, Spartan Capital Securities; “This data bails out the Fed and it puts them on hold in July. They will have to look at the July and August numbers to make a decision in in September.”

US yields moved higher after the data with the 10-year yield at around 4.48%.

UK yields also moved higher with the 10-year yield near 4.65% from earlier lows near 4.55%, but his failed to underpin the Pound amid unease over the impact of debt interest payments.

The latest UK inflation data will be watched closely on Wednesday with the headline and core rates expected to remain at 3.4% and 3.5% respectively.

In a brief to clients, Scotiabank described the Pound Sterling as a “mid-performer among the G10,” rising 0.2% against the US Dollar as it attempts to stabilise in the mid-1.34s following a sharp pullback from early July highs.

With no major UK data out, markets were focused on Wednesday’s CPI release, though Scotiabank believed it is “unlikely to shift expectations for the BoE,” which is still priced for a 25bp cut in August.

Technically, GBP/USD remains neutral, with the pair “struggling to extend much below the 50-day MA at 1.3501,” and expected to stay “range bound between 1.3400 support and 1.3520 resistance.”

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TAGS: Pound Dollar Forecasts