Pound to Dollar Weekly Forecast: Losses to 1.22 by End 2025?

March 23, 2025 - Written by Tim Boyer

STORY LINK Pound to Dollar Weekly Forecast: Losses to 1.22 by End 2025?

Foreign exchange strategists at Scotiabank forecasts Pound to Dollar (GBP/USD) exchange rate losses to 1.22 at the end of 2025.

Danske Bank, however, now has a 12-month GBP/USD forecast of 1.31 from 1.23 previously.

GBP/USD hit 4-month highs just above 1.30 during the week, but failed to hold the gains and retreated to 1.2900 late in the week as the dollar recovered.

US economic and dollar developments are likely to dominate.

The Federal Reserve held interest rates at 4.50%, in line with consensus forecasts.

The Fed cut its growth forecasts while projecting slightly higher inflation which increased stagflation fears and complicated the Fed’s task.

Scotiabank commented; “With inflation expectations sharply rising, we expect the Federal Reserve will remain on hold through the first half of the year even though growth is slowing more rapidly than expected so far this year. The Fed has little ability to respond to lower growth in the short run given what we still consider to be a challenging inflation outlook.”

Yields will tend to underpin the dollar, especially if risk appetite deteriorates.

Scotiabank notes domestic and global risks to growth which will spark volatility; “The direction of US economic and geopolitical policy is the greatest threat to the global economy.”

According to Standard Chartered; “The inflation risks are likely to put a floor under US bond yields and lead to a recovery in the oversold USD in the near term.”

The bank expects trade policies will be important with medium-term risks; “Implementation of wide-ranging US tariffs in April could sustain a near-term USD rally, although any hit to US growth is likely to eventually drag the USD lower.”

HSBC also expects trade policies will be crucial; “The key for the USD now is likely to rest more on how US trade policy evolves, rather than monetary policy. Our central case is that the USD will recover some lost ground over the long run, as US tariffs rise, the Fed does not cut more than what is already priced, and the rest of the world begins to look less exceptional again.”

According to Danske; “US recession fears have resurged with a softening of business sentiment, weakness in consumer confidence and weak retail sales weighing on growth prospects. These risks are further exacerbated by elevated uncertainty regarding tariff policy from President Trump.”

Danske has cut its dollar forecasts which has raised its GBP/USD profile. It added; “The shift in risk asset allocation away from the US appears structural, supporting our decision to raise the profile.”

The Bank of England held interest rates at 4.50% and expressed a high degree of uncertainty over the outlook.

Rabobank commented; “Our baseline scenario has not changed since last summer: the Bank of England will likely cut rates quarterly, focusing on meetings with a Monetary Policy Report, aiming to end 2025 with a policy rate of 3.75%.”

Danske expects quarterly interest rate cuts to 3.75%, but added; “If the BoE opts for a more front-loaded cutting cycle, this would act as a headwind for GBP.”

Socgen sees structural dollar losses; “The US slowdown has resulted in a small fall in consensus growth forecasts, and those will ned to fall further to justify rate/FX pricing. It has a year-end forecast of 1.32 with 1.34 in the first quarter of 2026.”

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TAGS: Currency Predictions Pound Dollar Forecasts