Pound to Dollar Forecast for Coming Week: Diverging FX Predictions

July 21, 2025 - Written by Frank Davies

STORY LINK Pound to Dollar Forecast for Coming Week: Diverging FX Predictions

The Pound to Dollar exchange rate (GBP/USD) faces diverging forecasts, with BNP Paribas targeting a rise to 1.42 by end-2026, while ING sees limited upside amid UK fiscal concerns and a slower Bank of England easing cycle; broader USD weakness may support Sterling, but political risk and Fed uncertainty keep short-term volatility high.

BNP Paribas forecasts that the Pound to Dollar rate will strengthen to 1.38 by the end of 2025 with a further advance to 1.42 by the end of next year.

ING forecasts that GBP/USD will be held to 1.34 on a 12-month view.

GBP/USD dipped to 8-week lows below 1.34 during the week before recovering slightly.

JP Morgan expressed concerns over the technical outlook with GBP/USD key trend support at 1.3376-1.3497.

Looking at the risk of a break it commented; “were to occur this summer. We see the 1.319-1.3148 area as the first medium-term support zone for the pair.”

UK data was mixed during the week, but did dampen expectations of a more aggressive Bank of England (BoE) series of rate cuts.


The headline inflation rate increased to 3.6% from 3.4% with an increase in the core rate to 3.7% from 3.5%.

The latest labour-market data reported a provisional 41,000 decline in payrolls for June, but the May decline was revised to 25,000 from the 109,000 reported previously.

The data eased fears over a rapid deterioration in the jobs market.

Markets are still confident that the BoE will cut rates at the August meeting.

BNP commented; “We continue to hold the view that the GBP can benefit from USD weakness, although not as much as the EUR, which has more positive drivers. We therefore see the GBP performing around the middle of the pack of G10 currencies as the weaker USD trend continues.”

ING remains concerned over the fiscal outlook; “Sterling is starting to underperform a little. Fiscal policy is back in the headlines after the government failed to deliver spending cuts in welfare. Other spending cut options look limited, leaving the alternatives of tax hikes or a softening of the fiscal rules – neither of which look good for sterling.”

ING added; “We still look for the Bank of England to cut rates on a quarterly cycle. But a quicker deterioration in the labour market could see the BoE terminal rate priced some 25-50bp lower to the 3.00/3.25% area. This could see GBP/USD lag in an otherwise soft multi-quarter dollar environment.”


There was firm US data during the week with markets cutting expectations of a September rate cut to around 40%.

Credit Agricole commented; “We think the Fed would prefer to examine another couple of reports before determining a course of action, given that the labour market has held up okay heading into the July FOMC. A September cut remains our current base case, though such a move is far from certain.”

The dollar did, however, slide briefly following reports that President Trump was on the point of dismissing Fed Chair Powell, but recovered quickly when this was denied.

MUFG considers that the threat to Fed independence will remain a key risk factor; “the scope for any meaningful recovery of the dollar remains very limited in our view given these building efforts by the Trump administration to interfere and turn the Fed notably more dovish over time.”

Goldman Sachs expects the US economy will struggle; “A key underpinning to our bearish Dollar outlook is that US firms and households will pay for the majority of the tariffs, which will weigh on US relative performance. This, together with broader policy uncertainty, will lead investors to reduce their exposure to US Dollars.”

BNP remains bearish on the dollar; “We expect the secular USD downtrend to continue as global investors further reduce their overweight and under-hedged US asset exposure.

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TAGS: Pound Dollar Forecasts