Dollar to Pound Forecast: USD Weakens on Surge in US Jobless Claims

Modified: Friday, 8 August 2025 06:51 BST - Written by David Woodsmith

STORY LINK Dollar to Pound Forecast: USD Weakens on Surge in US Jobless Claims

The Pound to US Dollar exchange rate (GBP/USD) jumped to a one-week best conversion on Thursday, lifted by surprisingly hawkish signals from the Bank of England (BoE) following its latest policy meeting.

At the time of writing, GBP/USD was trading at around $1.3426, up roughly 0.5% from Thursday’s opening levels.

The Pound (GBP) rallied on Thursday as investors responded to the BoE’s latest monetary policy decision, which, despite delivering a widely expected 25 basis point rate cut, carried a surprisingly hawkish undertone.

The Monetary Policy Committee (MPC) vote proved narrower than expected, with a 5-4 vote in favour of the cut, defying forecasts for a more unified outcome. This slim margin hinted at deeper divisions within the committee over whether more easing is justified.

In addition, the BoE raised its inflation forecast for the year, now predicting price growth will peak at 4%, up from its earlier 3.7% estimate.

Even Governor Andrew Bailey, who backed the rate reduction, took a firm stance on tackling inflation, stating the central bank ‘will do what it takes’ to bring it back to the 2% target.

The combination of a narrow vote, upgraded inflation outlook, and firm messaging led markets to dial back expectations for further rate cuts in 2025, driving Sterling sharply higher.


Meanwhile, the US Dollar (USD) came under modest pressure on Thursday after initial jobless claims for the previous week surpassed forecasts.

New claims rose to 226,000, up from the prior week’s 219,000 and above the predicted 221,000. This uptick added to growing concerns about a potential cooling in the US labour market.

The weaker-than-expected data added fuel to speculation that the Federal Reserve will resume cutting interest rates in the near term.

Looking to the remainder of the week, with major economic releases thin on the ground, the Pound to US Dollar exchange rate could be heavily influenced by shifts in broader market sentiment.

Focus may turn to geopolitical tensions, with former President Trump’s deadline for Russia to end its invasion of Ukraine looming on Friday.

Trump has threatened renewed sanctions, including secondary measures targeting nations that continue purchasing Russian oil. Should these threats escalate, the resulting market unease could benefit the US Dollar as investors seek safe-haven assets.

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TAGS: Pound Dollar Forecasts