Pound to Dollar Week Ahead Forecast: 1.40 Key Resistance

Modified: Sunday, 10 August 2025 18:00 BST - Written by Tim Boyer

STORY LINK Pound to Dollar Week Ahead Forecast: 1.40 Key Resistance

Foreign exchange strategists at ING forecast that the US dollar will weaken over the medium term, but they expect that the Pound to Dollar (GBP/USD) exchange rate will not be able to break 1.40 with a 12-month forecast of 1.36 as the Pound also struggles in global markets.

The Bank of England cut interest rates by 25 basis points to 4.00% at the latest policy meeting which was in line with strong market expectations.

There was, however, a 5-4 vote for the decision with four members backing no change.

The BoE, however, was also uneasy over inflation trends with a higher 2025 peak of 4.0% from 3.7% previously.

Markets were less confident that rates would be cut again in November.

According to Rabobank; “the very tight majority likely means inflation data, especially softening underlying inflation dynamics, will have to be ever more convincing going forward. It has led traders to lower their expectations of another cut this year.”

MUFG still expects a series of cuts; “All told, we still see a path ahead for the BoE to continue its stop-pause quarterly easing cycle with the next cut at that November meeting, and we continue to pencil in a terminal rate of 3.25%.”


It added; “But today’s vote has certainly laid bare how finely balanced the decision is for many MPC members at each meeting. Speeches over coming weeks will provide more colour on each policymaker’s decision-making process and could help to steer expectations.”

ING commented; “The fiscal situation in the UK remains tight and Chancellor Rachel Reeves needs to find a way to plug a £20-40bn hole in public finances at her next budget in November. Having ruled out hikes in the major taxes, her room for manoeuvre is quite limited, and any changes to the fiscal rules would be treated as a sterling negative.”

It added; “We’re bearish on the dollar into year-end and into 2026. GBP/USD may well lag a little, given the domestic story.”

MUFG is also bearish on the Pound fundamentals; “The contained move reflects the fact that while the MPC was more hawkish but for less than positive reasons. The stagflationary tilt is hardly a positive for investor sentiment. A central bank that is curtailed from cutting rates due to sticky inflation is not reason to be bullish.”

President Trump nominated Miran to replace Kugler as Fed Governor until the end of January

Miran has previously called for interest rates and for the dollar to be weakened from overvalued levels.

Markets are very confident that the Fed will cut rates in September and also consider that the most likely outcome is for three rate cuts by the end of 2025.


According to Scotiabank; “The decision to go with Miran does put a key ally of the president on the FOMC to bolster the argument of lower rates in the short run and strengthen market betting on a September Fed ease. Lower short-term rates and a steeper yield curve will add to USD headwinds.”

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TAGS: Currency Predictions Pound Dollar Forecasts