Pound to Dollar Forecast: Scope for GBP to Retest Resistance Near 1.36

Modified: Sunday, 7 September 2025 16:00 BST - Written by David Woodsmith

STORY LINK Pound to Dollar Forecast: Scope for GBP to Retest Resistance Near 1.36

The Pound to Dollar exchange rate (GBP/USD) climbed back above 1.35 on Friday after another weak US payrolls report reinforced expectations of imminent Federal Reserve rate cuts.

With non-farm payrolls rising just 22,000 in August and unemployment ticking up to 4.3%, markets are betting heavily on September easing.

Currency analysts see scope for GBP/USD to retest resistance near 1.36, though UK fiscal uncertainty and political risks remain a drag on Sterling’s longer-term outlook.

GBP/USD Forecasts: Back Above 1.3500

The Pound to Dollar (GBP/USD) exchange rate edged higher ahead of Friday’s New York open and spiked higher to 1.3530 following the US jobs data.

The dollar was undermined by another weaker-than-expected US jobs data, as markets continue to anticipate significant Federal Reserve rate cuts, while US yields moved lower.

According to Scotiabank; “Regaining the recent peaks around 1.3545/50 would confer a little more strength on the technical outlook and put the pound on track to test major resistance at 1.3595/00.”

US non-farm payrolls increased 22,000 for August compared with consensus forecasts of around 75,000. There was a small upward revision to the July figure to 79,000 from the flash reading of 73,000, but there was another downward revision for June with the BLS reporting a 13,000 decline, the first negative reading since the beginning of 2021.

Manufacturing and government jobs both recorded declines on the month.

The labour-market survey recorded an increase in the unemployment rate to 4.3% from 4.2%, equalling the highest reading since late 2021. There was, however, a significant increase in the number of people employed with an increase in the labour force.

According to Scotiabank; “There is little doubt that the US jobs market is loosening as labour demand softens.”

It added; “How quickly this dynamic develops remains to be seen but Fed policymakers appear to be increasingly conscious of the emerging labour market slack as they mull the rate outlook.”

Markets are extremely confident that rates will be cut in September and are pricing in over a 65% chance that there will be three cuts by the end of 2025.

MUFG was wary over forecasting heavy dollar losses; “Based on the resilience of the dollar this week given global factors are helping curtail non-dollar buying, an NFP print closer to zero or negative will likely be needed in order to trigger a notable drop for the dollar.”

UK retail sales data had little impact while there were slight Pound losses after the resignation of Deputy Prime Minister Raynor.

There are reports that Prime Minister Starmer will engage in a wider cabinet reshuffle with traders waiting to see whether there are any changes in the Treasury, especially given market sensitivity to fiscal policy.

Capital Economics deputy chief UK economist Ruth Gregory noted that many of the conditions which have led to fiscal crises in the past are now in place in the UK, but that a fiscal crisis in the UK is neither imminent nor inevitable.

According to Gregory; "The missing ingredient is a trigger. If a UK fiscal crisis does erupt, it’s as likely to come from a change in perceptions or personnel as economic data or policy."

She added; "This underlines the need for the government to continue to commit to fiscal discipline to keep the bond market onside."

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TAGS: Pound Dollar Forecasts