Pound Sterling to Dollar Forecast: GBP Rebounds as FED Rate Bets Intensify

Modified: Monday, 4 August 2025 18:00 BST - Written by Frank Davies

STORY LINK Pound Sterling to Dollar Forecast: GBP Rebounds as FED Rate Bets Intensify

The Pound US Dollar exchange rate (GBP/USD) edged higher at the start of the week amid a risk-on mood, although gains were limited in the absence of fresh economic data and ahead of key risk events later in the week.

At the time of writing, GBP/USD was trading at $1.3302, up around 0.2% on the day.

The US Dollar (USD) was subdued on Monday, with the ‘Greenback’ remaining on the back foot following Friday’s steep decline.

July’s non-farm payrolls report missed expectations, triggering a sharp repricing in interest rate expectations. Compounding the disappointment, June’s figure was revised dramatically lower to just 14,000 – prompting renewed speculation that the Federal Reserve could cut rates in September.

Furthermore, a moderately risk-on market mood dampened demand for the safe-haven US Dollar.

Meanwhile, the Pound (GBP) lacked strong directional momentum on Monday, as investors looked ahead to Thursday’s Bank of England (BoE) policy decision in the absence of any notable UK data.

A 25 basis point rate cut from the BoE is widely expected, but uncertainty surrounds how dovish the bank’s forward guidance will be. Markets are watching closely for any signal on whether this further rate cuts could come this year.


That said, the Pound – increasingly sensitive to global risk appetite – found modest support as markets remained in a cautiously optimistic mood. However, fears over the broader economic impact of US trade measures kept risk appetite in check.

Looking ahead, Tuesday’s ISM services PMI could inject fresh volatility into the Pound US Dollar exchange rate.

Markets expect a slight pickup in US services sector activity in July, with the index forecast to rise from 50.8 to 51.5. A stronger print may help ease concerns about the health of the US economy and revive demand for the ‘Greenback’, particularly after Friday’s disappointing payrolls data.

Meanwhile, the Pound could face renewed headwinds if the UK’s final services PMI confirms slowing momentum in the sector. The flash reading revealed an unexpected drop from 52.8 to 51.2; confirmation of that weakness may drag on GBP.

That said, if investor sentiment remains broadly risk-on, the Pound’s sensitivity to market mood could help limit any losses and keep GBP/USD supported.

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TAGS: Pound Dollar Forecasts