Pound to Dollar Week Ahead Forecast: 1.33 Short-Term Target

Modified: Monday, 4 August 2025 10:15 BST - Written by Frank Davies

STORY LINK Pound to Dollar Week Ahead Forecast: 1.33 Short-Term Target

Currency exchange strategists at Scotiabank forecast the Pound to Dollar exchange rate (GBP/USD) to gain to 1.48 by the end of 2026 amid a weak dollar trend.

HSBC, however, expects GBP/USD will make only slight gains to 1.35 by the second quarter of 2026.

GBP/USD posted sharp losses to 10-week lows around 1.3140 early on Friday before an unconvincing recovery.

The dollar gained strong support from the hawkish Federal Reserve rate cut. Although rates were held at 4.50% as expected and two members dissented from the decision, Chair Powell refused to yield to Administration pressure and did not make any pre-commitment to a September move.

Rabobank pointed out the ongoing tensions; “In case it wasn’t clear already, Donald Trump and Jay Powell’s bizarre walkthrough of the Fed’s renovations last week illustrated the degree to which the two men don’t see eye-to-eye.”

US non-Farm payrolls increased 73,000 for July compared with consensus forecasts of around 105,000 and there were huge downward revisions of 258,000 for May and June combined.

This data triggered a notable assessment of labour-market conditions and a fresh U-turn on market pricing with the chances of a September cut back to near 80%.


GBP/USD surged to 1.3300, but failed to hold the gains.

Risk appetite deteriorated sharply following the US jobs data amid fresh growth fears with markets also notably less comfortable surrounding US tariffs following the US jobs data.

President Trump’s attempt to fire the Commissioner of Labor Statistics is unlikely to improve overall dollar sentiment and there were sharp losses for US indices.

Scotiabank commented; “A more sustained reappraisal of US equity market prospects might, however, work to the detriment of the USD generally if investors opt to reallocate to relatively cheaper equity markets (such as Europe).”

Rabobank remains cautious over the near-term scope for rate cuts, but added; “Next year, it will be a different story. In 2026 Trump’s impact on monetary policy is likely to increase as Governor Kugler is replaced before the March meeting and a Trump-loyalist chairs the June meeting.”

The bank expects four rate cuts next year.

Scotiabank is uneasy over recent US budget legislation; “it adds significantly to fiscal sustainability concerns, and it may well raise the sovereign risk premium for the U.S. This, in addition to the increasingly shrill calls for the removal of Federal Reserve Chair Powell, points to heightened financial market uncertainty going forward.”


As far as the UK economy is concerned, HSBC notes domestic fiscal concerns; “it may be a repeat of last summer, which for many was spent wondering what difficult decisions would be taken in the Budget. Needless to say, this did nothing for consumer or investor confidence.”

MUFG also noted fiscal fears; “A debt doom-loop is an increasing concern and the negative correlation between GBP on a trade-weighted basis and 30-year Gilt yields remains more sustained in negative territory than in either the US or Japan.”

There are strong expectations that the Bank of England will cut rates this week with guidance set to the key component for the Pound.

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TAGS: Currency Predictions Pound Dollar Forecasts