Pound to Dollar Forecast: "We Maintain our Negative GBP View"

July 17, 2025 - Written by Frank Davies

STORY LINK Pound to Dollar Forecast: "We Maintain our Negative GBP View"

The US dollar has maintained a firm tone in global markets while the Pound Sterling has remained on the defensive.

The Pound to Dollar exchange rate (GBP/USD) briefly spiked on the UK inflation data, but failed to hold above 1.3400 and traded below this level. The pair is close to 3-week lows and a slide below 1.3370 would represent 8-week lows.

According to UoB; “We maintain our negative GBP view, even though the next technical target at 1.3320 may not come into view so soon – short-term oversold conditions could lead to consolidation first.”

SocGen sees the risk of further losses; “Failure to reclaim the MA at 1.3500 may lead to a deeper decline. The next objectives could be located at the projection at 1.3250 and the May low of 1.3130."

BNP Paribas is forecasting GBP/USD gains to 1.38 at the end of 2025 as the dollar dips again.

The shift in interest rate expectations and confidence in central banks will be crucial short-term elements.

Traders are still betting heavily on an August Bank of England rate cut, but now consider that the chances of a September Fed cut have dipped below 50%.


At this stage, markets also expect US Federal Reserve rates will be higher than Bank of England rates over the remainder of 2025.

The US 10-year yield has increased to near 4.50% which has underpinned the dollar in global markets.

The headline UK inflation rate increased to 3.6% in June from 3.4% while the core rate increased to 3.7% from 3.5%.

The goods inflation rate jumped to 2.4% from 2.0% with the services-sector rate unchanged at 4.7%.

Following the data, markets remain convinced that rates will be cut in August and markets expect two further cuts by mid 2026.

Thursday’s UK jobs data is likely to be pivotal for near-term Pound direction.

ING commented; “we expect cuts in August and November. But tomorrow's jobs numbers are key; if we see another bad payroll figure, that would put a lot of pressure on the Bank to shift in a more dovish direction.”


Peel Hunt Chief economist Kallum Pickering considers that too many cuts are priced in already; “We expect just two more cuts this year and no cuts thereafter – we look for upside surprises to economic activity to encourage policymakers to stop a little short of what money markets expect.”

The US inflation outlook and tariffs impact will inevitably continue.

ING expects there will be a strong tariff impact; “From here, markets should have a harder time justifying bets on a September cut unless jobs data capitulates.”

At this stage, MUFG is still backing a September rate cut, but confidence has declined.

ING added; “it is quite likely that a stretched dollar short positioning triggered a slightly outsized USD bounce. But yesterday’s reality check on Fed cuts speculation could have a lasting effect by raising the bar for dovish repricing, and we therefore feel the risks remain skewed to a stronger dollar from here.”

There is still the possibility that Trump’s relentless pressure on the Federal Reserve in general and Chair Powell in particular will hamper the dollar and potentially trigger a slide.

Rabobank cross-asset macro strategist Molly Schwartz commented; "The additional unwanted attention on Powell has given some credence to the notion that we could see his early departure and an early nomination from Trump."

The latest rumour is that Treasury Secretary Bessent will be nominated as the next Fed Chair.

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TAGS: Pound Dollar Forecasts