GBP/USD Forecast: Pound Sterling Tests One-Week Low on EU-US Trade Deal

Modified: Monday, 28 July 2025 14:45 BST - Written by David Woodsmith

STORY LINK GBP/USD Forecast: Pound Sterling Tests One-Week Low on EU-US Trade Deal

The Pound US Dollar (GBP/USD) exchange rate slipped to a one-week low on Monday as markets digested the EU-US trade deal announced over the weekend.

At the time of writing, GBP/USD was trading at $1.3417, having touched a one-week low of $1.3407 earlier in the session.

The US Dollar (USD) advanced at the start of the week, lifted by relief among investors following a breakthrough trade agreement between the United States and the European Union.

The pact averts a potentially damaging trade conflict, with both sides stepping back from the brink after the US threatened to impose 30% tariffs on EU imports. In response, the EU had prepared to counter with so-called ‘anti-coercion’ measures.

Analysts suggest the deal strongly benefits the US, with one describing it as a ‘big win’ for President Donald Trump. Under the terms, the EU has committed to purchasing $750bn in energy and semiconductor products from the US over the next three years, alongside plans to invest $600bn in the American economy over the same timeframe.

The Pound (GBP) was on the back foot on Monday, slipping against the strengthening US Dollar as worries over the UK’s fiscal outlook dampened investor appetite.

Concerns about rising debt levels and the sustainability of public finances weighed on Sterling, particularly after high-profile hedge fund manager Ray Dalio warned that the UK is trapped in a ‘doom loop’ of mounting debt, elevated taxes, and weak growth.


His comments followed disappointing public borrowing figures and speculation that Chancellor Rachel Reeves may be forced to announce tax hikes in the autumn, having failed to deliver welfare reform.

Nevertheless, GBP/USD avoided steeper losses thanks to a broadly risk-on tone across European markets, which helped support the increasingly risk-sensitive Pound against other major currencies.

Looking ahead, Tuesday kicks off a packed schedule of US economic data, starting with the latest job openings report. Markets are bracing for a decline in vacancies during June – a result that could spark fresh concerns about labour market softness and weigh on the Dollar.

At the same time, the release of the US consumer confidence index may offset some of that pressure. Sentiment is forecast to have improved in July, which could help buoy the ‘Greenback’ if the data comes in strong.

In contrast, the UK calendar remains light, leaving the Pound likely to take its cues from broader market sentiment. If investors remain upbeat, risk appetite could lend Sterling some support while also potentially tempering demand for the safe-haven Dollar.

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TAGS: Pound Dollar Forecasts