Pound Sterling Hits Low Against Dollar and Euro on Hawkish Fed

Modified: Thursday, 31 July 2025 13:15 BST - Written by David Woodsmith

STORY LINK Pound Sterling Hits Low Against Dollar and Euro on Hawkish Fed

The Pound to US Dollar (GBP/USD) exchange rate hovered near a two-month low on Thursday, with the Greenback consolidating gains from the previous session.

At the time of writing, GBP/USD was trading at around $1.3243, largely unchanged from Thursday’s opening levels.

The US Dollar (USD) opened Thursday’s session on solid footing, after surging on Wednesday in response to upbeat data and hawkish central bank commentary.

The ‘Greenback’ initially strengthened after US GDP for the second quarter outpaced expectations. The economy grew at an annualised rate of 3.0%, smashing forecasts of 2.4% and sharply rebounding from the 0.5% contraction recorded in Q1.

These gains were then turbocharged following the Federal Reserve’s latest interest rate decision.

The Federal Reserve’s decision to leave interest rates unchanged didn’t catch anyone off guard. Fed Chair Jerome Powell’s post-decision remarks fuelled further US Dollar strength.

Powell pushed back against pressure from President Trump to cut rates, reaffirming that the Fed sees its current policy stance as “moderately restrictive” and appropriate in the face of tariff-driven inflation.


Meanwhile, the Pound (GBP) traded without clear direction on Thursday, amid a continued scarcity of fresh UK economic data.

With no domestic headlines to guide investors, GBP was left to track broader currency flows. The Pound ceded some ground to risk-on currencies amid a mild improvement in global sentiment.

Concerns over the UK’s economic outlook also lingered in the background, with recent data and policy announcements casting a shadow over future growth and fiscal stability.

Looking to the end of the week, the GBP/USD exchange rate could find room to recover if the upcoming US non-farm payrolls report underwhelms.

Economists predict the US added just 110,000 jobs in July, marking a slowdown from June’s 147,000 gain. A rise in the unemployment rate to 4.2% could further dampen expectations for a prolonged pause in Fed policy tightening.

Conversely, any signs of resilience in the labour market may lend additional strength to the US Dollar.

In the UK, the latest manufacturing PMI is due for release. If the data confirms another month of contraction in factory activity, it could act as a drag on the Pound going into the weekend.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Pound Dollar Forecasts