GBP/USD Forecast: Pound Sterling Softens on Robust US PPI

Modified: Thursday, 14 August 2025 16:00 BST - Written by Frank Davies

STORY LINK GBP/USD Forecast: Pound Sterling Softens on Robust US PPI

The Pound to US Dollar (GBP/USD) exchange rate stumbled on Thursday, bringing the pairing’s recent bullish run to an end.

At the time of writing, GBP/USD was hovering near $1.3552, down around 0.2% from Thursday’s opening level.

The US Dollar (USD) trended broadly higher on Thursday, following the release of the latest US producer price inflation figures.

July’s PPI figures outpaced expectations, reporting factory input costs rose 3.3% year-on-year, comfortably above the 2.5% forecast.

The stronger-than-anticipated inflation reading lifted USD as it prompted some traders to dial back expectations for a 50bps interest rate cut from the Federal Reserve next month.

This built on earlier gains for the US Dollar as investors favoured the safe-haven asset ahead of the meeting between US President Donald Trump and Russian President Vladimir Putin.

Although Sterling slipped against the US Dollar, it posted gains versus most other major currencies on Thursday following the release of the UK’s latest GDP figures.


The Office for National Statistics (ONS) reported that the UK economy grew 0.3% in the second quarter, slower than the 0.7% growth in Q1 but comfortably above the 0.1% increase forecast.

Growth in June alone was particularly strong, coming in at 0.4% month-on-month.

The upbeat GDP data helped reinforce hawkish expectations for the Bank of England (BoE), easing pressure on policymakers to speed up rate cuts.

Even so, analysts warned that this solid performance is unlikely to spare the government from introducing fresh tax rises in the autumn budget - a concern that kept Sterling’s rally in check.

Towards the end of the week, GBP/USD movement is likely to be shaped by the latest round of US economic releases due on Friday.

US retail sales figures will be watched closely, with any signs of resilient consumer activity likely to buoy the Dollar.

Shortly after, the University of Michigan’s consumer sentiment index will be published, with forecasts pointing to another improvement in morale, potentially lending further upside to the ‘Greenback’.


Meanwhile, Sterling’s performance may hinge on broader market sentiment. If investors remain risk-averse ahead of the Trump–Putin meeting in Alaska, the Pound could face additional pressure against the US Dollar.

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TAGS: Pound Dollar Forecasts