Pound-to-Dollar Forecast: Sterling at 20-Day Best on Fed, Data Jitters

Modified: Wednesday, 13 August 2025 11:00 BST - Written by Frank Davies

STORY LINK Pound-to-Dollar Forecast: Sterling at 20-Day Best on Fed, Data Jitters

US Dollar Lurches Lower on Multiple Fears, GBP/USD Hits 20-Day Highs

The dollar has come under renewed pressure in global markets with the Pound to Dollar (GBP/USD) exchange rate surging to 20-day highs just above the 1.3550 level.

Strong expectations of a September rate cut, allied with on-going fears over threats to US institutional independence, have hurt the dollar.

According to MUFG; “Ongoing uncertainty over a dovish shift in the make-up of the Fed board and Chair alongside fresh uncertainty over potential political interference in US economic data is encouraging market participants to maintain a higher risk premium priced into the US dollar.”

The next major target for GBP/USD will be the late-July highs around 1.3590.

A sustained move above here would ignite speculation over a challenge on 41-month highs around 1.3800.

UoB is not convinced that GBP/USD can break above the July highs and added; “To sustain the momentum, GBP must not break below 1.3460, with minor support at 1.3480.”


US inflation data was mixed with the headline rate holding at 2.7% compared with consensus forecasts of a slight increase to 2.8% while the core rate increased slightly more than expected to 3.1% from 2.9%.

Markets assumed that the data would not stop the Federal Reserve cutting interest rates and are now pricing in over a 95% chance of a cut in September. Traders are more convinced that there will be three cuts by the end of 2025.

ING commented; “At this stage, the dollar has few bullish arguments to hold onto. Upcoming surveys might paint a better activity picture, but it's all about the jobs market now: a substantial recovery in the dollar from these levels appears realistic only if jobs figures turn significantly stronger.”

Commonwealth Bank of Australia currency strategist Carol Kong injected a note of caution "The July CPI report showed less evidence of tariff pass-through to consumer prices, but I think a September rate cut is less than certain, probably not as certain as current market pricing."

The dollar was also undermined by fresh concerns surrounding political interference in central bank policy and economic data releases.

On Tuesday, the new chief of the Bureau of Labor Statistics (BLS), EJ Antoni stated that he is considering suspending the monthly jobs data and only releasing quarterly data.

This move would increase fears that the Administration is looking to manipulate the data.


ING commented; “It’s hard to gauge exactly how seriously markets are taking this threat.”

Nevertheless, it added; “We think the downside risks for the dollar are substantial should the BLS go ahead with the frequency change.”

President Trump also launched another attack on Fed Chair Powell with a warning that he was considering launching a lawsuit due to alleged mismanagement and cost overruns surrounding the Fed renovation programme.

MUFG commented; “It provides another worrying indication that President Trump continues to flirt with the idea of firing Fed Chair Powell.”

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TAGS: Pound Dollar Forecasts