Pound to Dollar Forecast: "Sterling can sell off Alongside Euro"

The US Dollar (USD) maintained a firm tone against the Pound Sterling (GBP) in global markets on Tuesday, ahead of the Federal Reserve's policy decision on Wednesday, with the currency index at its 5-week high.

Pound Sterling was broadly stable on the crosses amid positive UK data, but the Pound to Dollar exchange rate (GBP/USD) dipped to 10-week lows just above the 1.3300 level before attempting to stabilise and trading around 1.3325.

According to ING; “the fact that GBP/USD has now broken under 1.3370 support suggests sterling can sell off alongside the euro. There is a technical case now for GBP/USD to trade down to the 1.3150 area. That is our preference in a week where we think the event risks are skewed to the positive for the dollar.”

UoB commented; “Although conditions are deeply oversold, there is still no clear sign that the decline has stabilised.”

It added; “The price action continues to suggest GBP weakness, and the next technical target is 1.3300. We will maintain our negative view as long as 1.3465 is not breached.”

Scotiabank noted the importance of 1.3300; “Renewed gains toward 1.34 would allow for a return to a more neutral view, while a break to fresh lows targeting 1.33 would shift our outlook in a more bearish manner.”

As far as US data is concerned, consumer confidence improved to 97.2 for July from a revised 95.2 previously and above consensus forecasts of 95.9.


A small decline in the current conditions index was offset by a larger improvement in the expectations component.

Conference Board Senior Economist Stephanie Guichard commented; "Consumer confidence has stabilized since May, rebounding from April's plunge, but remains below last year's heady levels.”

The appraisal of current job availability weakened for the seventh consecutive month and posted the lowest level since March 2021.

The latest JOLTS data recorded a decline in job openings to 7.44mn for June from a revised 7.71mn previously and below market expectations of 7.51mn.

Scotiabank; is still sceptical on the dollar outlook; “It’s not clear to us that the USD rebound will stretch much further.

The bank added; “It might, given the extensive fall in the USD through the first half of the year, but the broader drivers of USD weakness earlier this year—erosion of “US exceptionalism” as tariffs undercut US growth and lift inflation risks and structural headwinds from weaker fiscal policy settings remain very much in place.”

According to Credit Agricole; “All in all, the USD has been able to keep a relatively cool head in the run up to what could prove to be a pivotal week.”


The UK data recorded an increase in June mortgage approvals to 64,200 for June from 63,300 the previous month and above consensus forecasts of 63,000 with a further net increase in re-mortgaging activity to the highest level for close to four years.

With food-price inflation increasing to 4.0% for July, there is little incentive for the Bank of England to be more aggressive in cutting interest rates.

Scotiabank commented; “Domestic rate expectations are offering some support as markets soften their expectations for BoE easing. A 25bpt cut is almost fully priced for August 7, but markets are assessing the extent of additional easing by year end and have softened their expectations by about 5bpts over the past week or so.”

The bank also noted that long non-commercial Pound positions have been liquidated, lessening the threat of further position adjustment and selling pressure.

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