Pound to Dollar Support "to be Limited" on Three BoE Rate Cuts in 2025

Published: Thursday, 31 July 2025 08:00 BST - Written by Tim Boyer

STORY LINK Pound to Dollar Support "to be Limited" on Three BoE Rate Cuts in 2025

The Pound-to-Dollar exchange rate (GBP/USD) secured a limited net advance in early Europe on Wednesday, but the recovery reversed decisively after the New York open as firm US data triggered another lurch lower for European currencies.

From highs around 1.3385, the pair dipped sharply to fresh 10-week lows just below the 1.3300 level.

According to UoB; “GBP/USD is likely to remain under pressure, but it is too early to expect a decline toward May’s low of 1.3140.”

Barclays notes the break of 1.3370 and noted a failure there would risk triggering more sustained selling. A swing down to test the base of the April/May range at 1.3142 would be the initial objective on that outcome.

It added; “We’d retain a neutral footing just here, but would expect to find sellers on any bounce towards 1.3500/12 with those lower levels in mind.”

US GDP data recorded annualised growth of 3.0% for the second quarter of 2025 after a 0.5% contraction previously and above consensus forecasts of 2.5% growth.

Elsewhere, ADP reported an increase in private payrolls of 104,000 for July compared with expectations of around 80,000 and following a revised 23,000 decline for June.


There are strong expectations that the Federal Reserve will hold interest rates at 4.50% at the latest policy meeting.

Guidance from the central bank will inevitably be a key element and the data has not, at this stage, signalled any serious downturn.

MUFG commented; “The key tonight is that Powell will have to keep his options open for September. There will be NFP and CPI reports before the September FOMC and while the uncertainties over tariffs impacting inflation will still exist then, if inflation has remained broadly stable by then and the jobs market hasn’t weakened, the FOMC will cut.”

It added; “While that outcome is still very unclear, getting positioned for possibly cut does suggest Powell tonight will make clear it’s an option dependent on certain outcomes. That could well bring to a halt the positive dollar momentum we have seen so far this week.”

According to Commerzbank; “It [the FOMC] will probably start to indicate that the first interest rate cut is imminent in September.”

It added; “At the press conference, Fed Chairman Jerome Powell is therefore likely to emphasise that the Fed's focus is on the slow weakening of the labour market and the real economy as a whole. Depending on how clearly he announces the interest rate cuts, the US dollar is likely to come under more or less pressure this evening.”

ING is more positive on the dollar outlook; “Chair Powell is likely to face questions regarding his position amid increased political pressure from President Trump to cut rates or step down.


It added; “To date, Powell has provided no indication of a policy shift, and we expect a reaffirmation of the Fed’s independence alongside his commitment to remain in office. This, combined with a stronger-than-expected GDP print, can add fuel to the dollar’s good momentum.”

Bank of England expectations will also be a key element for the Pound.

ANZ commented on the underlying outlook; “A forward-looking approach warrants that the MPC ease the level of policy restriction to guard against downside risks to economic activity and the labour market.

The bank expects three rate cuts by the end of 2025 which would tend to limit Pound support.

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TAGS: Pound Dollar Forecasts