Pound to Dollar Week Ahead Forecast: GBP/USD Struggle Near 1.36

Modified: Monday, 18 August 2025 07:00 BST - Written by Frank Davies

STORY LINK Pound to Dollar Week Ahead Forecast: GBP/USD Struggle Near 1.36

Most investment banks are still reluctant to forecast the Pound to Dollar (GBP/USD) exchange rate trading above 1.40.

HSBC, for example, forecasts that GBP/USD will trade at 1.37 at the end of 2025 with a retreat 1.35 at the end of next year.

Many banks do see scope for the dollar to weaken further, but expect the Pound will struggle to take advantage.

HSBC commented on the Pound; “For GBP, the Autumn Budget stands as a major risk. Higher taxes could alter the outlook for inflation and unemployment.

GBP/USD tested 6-week highs just below 1.36 during the week before edging lower.

During the week ahead, UK inflation and comments from Fed Chair Powell will be crucial.

The latest UK GDP data was stronger than expected with 0.4% growth for June compared with consensus forecasts of 0.2%.


Growth for the second quarter slowed to 0.3% from 0.7% previously, but above expectations of 0.1%.

There was, however, a strong contribution from government spending and underlying components were less favourable.

According to MUFG; “the positive impact on the pound from stronger headline growth has been dampened somewhat by the less favourable breakdown of expenditure in Q2.”

MUFG commented; “Overall, the report is unlikely alter market expectations that the BoE is becoming more cautious over delivering further easing this year. The BoE indicated earlier this month that it is less confident it will continue to cut rates every quarter.”

According to UBS; “With the hawkish-leaning Bank of England (BoE) meeting and the somewhat stronger GDP release behind us, the focus will shift to UK inflation data, due next Wednesday.

UBS added; “Should the data support the BoE’s more hawkish stance, this could lend further support to the pound. However, we argue much is in the price already and do not foresee a sharp rally—we expect the 1.38 resistance level (the year-to-date high) to only be broken sustainably later in the year.”

Markets remain very confident that the Fed will cut interest rates at the September meeting despite doubts whether the fundamentals justify a rate cut at this stage.


JP Morgan commented; “It's not unprecedented for the Fed to ease when stocks are at or near all-time highs. It’s rarer when stocks are at the highs and inflation is above target and inflecting higher. So, an ease next meeting isn't likely to be broadly welcomed by the Committee.

According to HSBC; “It is worth looking back in time when political pressure for the Fed to lower interest rates occurred amid a US stagflationary setting (i.e. the 1970s ). This episode coincided with material underperformance of the USD. This is not our baseline scenario but we need to be aware of the past to gauge any future risks.”

Scotiabank continues to see underlying dollar vulnerability; “If the Fed does opt to ease amid intense political pressure for lower rates and stubborn inflation, investors may become more concerned that the Fed’s inflation anchor is slipping which can only weaken the appeal of the USD.”

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Pound Dollar Forecasts