June 22, 2025 – Written by Tim Boyer

STORY LINK Pound to Dollar Forecast: End to GBP Rebound on Break Below 1.3420

The Pound to Dollar (GBP/USD) exchange rate found support above 1.3400 and consolidated close to 1.3500 in New York trading.

The Pound was unable to draw support from the UK data while a net easing of immediate geo-political concerns curbed dollar support as the US appears to have pulled back from an immediate attack on Iran’s underground nuclear facilities.

According to UoB; “On the downside, if GBP breaks below 1.3420 (minor support is at 1.3445), it would indicate that GBP is not rebounding further.”

It expects resistance in the 1.3500-20 range.

Scotiabank is still bullish on GBP/USD, but does note that a loss of momentum is worrying. It added; “In terms of near-term price action, we look to support at 1.3400 and see limited resistance ahead of 1.3550.”

Immediate Middle East concerns eased slightly amid hopes that any delay in sanctioning a US attack on Iran would give diplomacy a chance, but there is still a high degree of uncertainty.

Scotiabank commented; “President Trump appears to want to give diplomacy more time but the mixed messaging highlights the rather capricious and volatile nature of policymaking in this administration.”

The Federal Reserve and Bank of England both decided against changing interest rates this week, but there are huge challenges for both central banks given the global environment.

Saxo chief investment strategist Charu Chanana commented; “Rising oil prices introduce inflation uncertainty at a time when growth is weakening.”

She added; “That makes central banks’ jobs much harder — do they ease to support growth or hold back to avoid fuelling inflation? Most seem to be prioritizing growth concerns for now, assuming that crude gains may not be sustained.”

UK data illustrated underlying challenges. UK government borrowing increased to £17.7bn in May from £17.0bn last year. Data for the first two months of 2025/26 were still below the March OBR forecast, but there are clear underlying pressures.

RSM economist Thomas Pugh commented; “Looking ahead to the budget in the autumn, the under performance of the economy and higher borrowing costs mean the chancellor may already have lost the £9.9bn of fiscal headroom that she clawed back in March.

He added; “We are pencilling in tax increases of £10-£20bn. The good news is that with interest rates likely to be around 4% at the time of the budget there is plenty of scope for the Bank of England to cut rates to offset the impact of any fiscal consolidation on the economy.”

Elsewhere, retail sales volumes posted a sharp 2.7% drop for May after a revised 1.3% increase for April amid a sharp decline in food sales on the month following a weather-related surge in April.

According to Rabobank there will be quarterly BoE rate cuts; “This pace gives the Committee space to assess inflation persistence, labour cost dynamics, the Trump presidency and its Schrödinger’s tariffs, and any new shocks that undoubtedly emerge, such as in the Middle East right now.”

Rabobank added; The limits of monetary policy may again be explored if Iran makes good on renewed threats overnight to close the Strait of Hormuz. Unfortunately, central banks can’t print oil or gas.”

The US Philadelphia Fed manufacturing index was unchanged at -4.0 for June, compared with consensus forecasts of -2.0 with a slight easing of inflation pressures.

Companies were less confident over the outlook with expectations of stronger upward pressure on prices.

Scotiabank considers that the dollar price action is disappointing; “FX price action suggests the brief push higher in the USD yesterday through trend resistance that has dictated the slide in the index since January has been rejected.”

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TAGS: Pound Dollar Forecasts

Can the US dollar finally carve out a significant bottom next week? The signs are there, but buyers have work to do.

Watch today’s Weekly Forex Forecast to see how I’m trading the DXY, EURUSD, GBPUSD, USDJPY, and XAUUSD!

US Dollar Index (DXY) Forecast

The DXY is attempting a significant breakout this week. I have discussed the February trend line in recent videos, combined with the massive confluence of support at 97.70.

So far, the USD index has bounced at 97.70, but buyers are struggling to break above the 99.00 mark. That isn’t surprising, given the significance of the 2025 trend line.

As mentioned in recent videos, step one for the DXY to confirm a bottom occurred with Tuesday’s 98.30 breakout. Step two is to break 99.00, which has yet to happen.

There is an intraday imbalance just below 98.30 that could come into play soon. I would like to see the DXY clean up the 98.29 single print before looking for USD longs next week. While there’s no guarantee, it would be ideal from a liquidity standpoint.

Key support for DXY is 98.30, with resistance at 99.00 and 100.20.

EURUSD Forecast

EURUSD has an important decision to make. The pair failed to hold the 1.1530 breakout during Tuesday’s session, pointing to a potential euro top.

However, EURUSD bulls saved the uptrend with Thursday’s bounce from 1.1440. That leaves the pair in a stalemate between 1.1530 and 1.1440.

There is a buy-side single print at 1.1540 that could come into play next week. How the EURUSD reacts to that (if tested) could determine the next big move for the euro.

I remain short the EURUSD from 1.1522. Any sustained break above 1.1530 on the high time frames would invalidate the idea.

GBPUSD Forecast

GBPUSD is at a similar crossroads to its euro counterpart. The pair broke its rising wedge on Tuesday, but buyers stepped in at 1.3430 support on Thursday.

For now, GBPUSD remains locked between 1.3430 support and 1.3630 resistance. However, Tuesday’s breakdown left a buy-side imbalance near 1.3540, which is also key resistance.

If the pound is going to reverse lower, the 1.3540 resistance area needs to hold next week. Additionally, GBPUSD will need to fall convincingly below 1.3430 to secure a significant top for the pound.

Remember that the DXY also needs to break its 2025 trend line resistance convincingly to confirm a dollar bottom.

USDJPY Forecast

USDJPY is breaking above the 145.40 key level I’ve discussed in recent videos. That was one factor needed to confirm a high probability long setup.

The second factor is the DXY breaking its trend line resistance, which it’s close to achieving. And the third factor is the Yen Basket failing to hold its 2020 trend line.

We are incredibly close to the perfect storm for yen shorts. The only thing left is to see the Yen Basket close a week below its 2020 trend line and the DXY clear its 99.00 trend line.

Of course, there are no guarantees. If these scenarios don’t pan out

XAUUSD (Gold) Forecast

XAUUSD struggled this week after closing below $3,388. That was the bearish scenario for gold that I outlined in the last Weekly Forex Forecast.

However, despite the US dollar starting to look more bullish, I’m not interested in gold shorts. The metal has trended higher for years, and I don’t see a clear opportunity to get short.

At the same time, buying XAUUSD is a challenge while below all-time highs.

A pullback into $3,250 could be interesting for a long. However, given how strong gold has been lately, I’m not convinced we’ll see the yellow metal get that low.

Alternatively, a sustained break above $3,430 on the high time frames would open up $3,500.

• The GBP/USD weekly forecast is mildly bearish amid central bank divergence.
• The Middle East crisis continues to weigh on the pound, adding gains to the US dollar.
• Market participants set eyes on PMI readings and US GDP and inflation data.

The British pound managed to partially recover its losses against the US dollar after the pair plunged to the monthly low of 1.3400. The downside came after the dollar picked up strength amid escalating Middle East tension. Moreover, the diverging central bank signals also weighed on the GBP/USD.

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The week began with the shockwaves coming from the Iran-Israel war that deteriorated the global risk sentiment. The fears of oil supply disruption via the Hormuz Strait triggered a broader risk aversion that pushed safe-haven flows to the US dollar. The dollar’s recovery was further supported by the hawkish Fed tone as the Fed held rates unchanged and reiterated data dependence for the next rate cuts.

President Trump maintained an aggressive stance against Iran, calling for unconditional surrender. He approved military action against Iran but kept it on hold for two weeks before taking a decisive action. This temporarily de-escalated the tension and provided some temporary support to the risk assets.

This sentiment shift allowed the pound to recover from the monthly lows. Meanwhile, the Bank of England’s dovish tone was already priced in. The central bank held rates on hold at 4.25%, with the BoE governor hinting at future cuts. However, the MPC vote split gave a hawkish signal as six members voted in favor of a hold while three members voted for a cut.

Nevertheless, the pound’s recovery was overshadowed by the weaker UK retail sales data that showed a 2.7% decline in May, raising concerns about the UK’s consumer demand.

Key Events for the GBP/USD Next Week

Looking forward, the traders will primarily focus on central bank commentary and PMI readings from both sides of the Atlantic. The US Core PCE Index, US GDP, and Durable Goods Orders data are also important to watch.

GBP/USD Weekly Technical Forecast: Buyers Exhausted Under 20-SMA

The GBP/USD daily chart shows a slight bearish scenario as the price remains below the 20-day SMA level. Earlier in the week, the price briefly broke the key support zone at 1.3400 but managed to recover. However, the price tested the 20-day SMA and reversed the gains on Friday. It shows a sign of buyers’ exhaustion. Still, the major support of 1.3400 continues to support the pair.

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Breaking the 1.3400 level may bring the 1.3340 level as a target ahead of 1.3265. The daily RSI is near 50, showing no clear bias at the moment. However, the probability of a downside breakout is higher.

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• GBP/JPY up 0.43%, on track for weekly gain over 0.40% amid resilient buyer momentum.
• Pair nears June 17 high at 196.83; close above 197.00 could open path to 198.00.
• RSI remains bullish; downside risks emerge below 195.29 Tenkan-sen support.

The GBP/JPY recovers and rallies for the second straight day, is up 0.43%, trades at 196.59, shy of reclaiming the 197.00, poised to finish the week with gains of over 0.40%. Market mood remains sour, but it was not an excuse for buyers to lift the cross-pair to fresh three-day highs.

GBP/JPY Price Forecast: Technical outlook

The GBP/JPY pair remains consolidating, ahead of breaking the June 17 high of 196.83. A breach of the latter clears the path to test 197.00. If the pair prints a daily close above the latter, buyers could target 198.00 as they launch an assault to the yearly high of 198.24.

From a momentum standpoint, the Relative Strength Index (RSI) confirms that the GBP/JPY remains bullish and that buyers are gathering momentum.

For a bearish move, sellers must drag the pair below the Tenkan-sen at 195.29. On further weakness, the GBP/JPY could dive to 194.82, where the Senkou Span A lies, followed by the Kijun-sen at 194.35.

GBP/JPY Price Chart – Daily

June 20, 2025 – Written by Ben Hughes

STORY LINK Pound Rate Today: Short Covering Underpins GBP vs EUR, USD

The British Pound (GBP) dipped against the Euro (EUR) and US Dollar (USD) in immediate response to the Bank of England (BoE) interest rate decision, but found solid support on dips with an element of short covering after the currency failed to extend losses.

Global markets were subdued amid a US market holiday, but conditions were still very tense given speculation over a US military strike on Iran’s nuclear infrastructure.

The Pound to Euro (GBP/EUR) exchange rate dipped to 1.1685 before a recovery to 1.1710 and marginal gains on the day

According to ING; “We retain a short-term target in EUR/GBP at 0.860. (1.1630 for GBP/EUR). It added; “Geopolitical risks and a potential return of trade-induced market volatility in July argue that the balance of risks remains tilted to the upside for the pair despite the recent rally.”

The Pound to Dollar (GBP/USD) exchange rate hit lows near 1.3400 before a rebound to near 1.3450.

Scotiabank commented; “The multi-month trend is intact, for now, as GBPUSD tests the important medium-term 50 day MA (1.3390) support level. A break from here would call for a more decisive call in the trend shift. The latest pair of doji candles signals uncertainty, and we expect the near-term range to be defined by support below 1.3380 and resistance above 1.3480.”

The Monetary Policy Committee (MPC) held interest rates at 4.25%, in line with strong consensus forecasts with the chances of a cut seen at below 5%.

There was no updated Monetary Policy Report at this meeting and, therefore, no fresh macroeconomic forecasts.

There was a 6-3 vote split for the decision with Dhingra, Taylor and Ramsden dissenting and calling for a further 25 basis-point cut to 4.00% at this meeting.

According to Handelsbanken UK economist Daniel Mahoney; “The central bank’s decision was slightly more dovish than expected.”

He added; “I think most people in the markets thought there would be a 7-2 so I think that’s interesting, but I think those three members are obviously focusing on some of those domestic indicators.”

The key theme was uncertainty, especially given important trade and Middle East tensions.

The bank maintained its overall guidance; “Given the outlook, and continued disinflation, a gradual and careful approach to the further withdrawal of monetary policy restraint remained appropriate.”

It added; “The Committee would continue to monitor closely the risks of inflation persistence and what the evidence might reveal about the balance between aggregate supply and demand in the economy.”

It noted that wages growth has slowed and expects this process will continue, but it was still not willing to sound the “all clear” on wages or inflation.

In this context, it stated that further progress is needed to reach the 2% target.

The majority was confident that disinflation was continuing but commented that; “there was not a strong case for a further easing of monetary policy at this meeting.”

Governor Bailey commented; “The world is highly unpredictable. In the UK we are seeing signs of softening in the labour market. We will be looking carefully at the extent to which those signs feed through to consumer price inflation.”

There will also be concerns over any further increase in energy prices.

ING commented; “The hawks, meanwhile, will also have a beady eye on oil prices. Though the rise so far won’t make much difference to the inflation outlook we know some at the Bank are wary of a repeat of 2022, where a rise in energy prices turned into a much wider and more persistent services-driven inflation episode.

PwC chief economist Barret Kupelian also noted geopolitical uncertainty and the threat of a surge in oil prices.

He added; “If that rally embeds itself into wage setting or in household bills, the upside risk to inflation could well push any rate cut further down the calendar. In these murky waters, patience is the Bank’s best compass, steering a steady course between hawkish overreach and premature relief.”

Handelsbanken’s Mahoney considered that comments that the bank is not on a pre-set path was a “critical point.”

In this context, a major spike in oil prices could force the bank to consider a rate hike.

According to the minority, policy was too restrictive at the current time and a further cut was needed at this time to avoid inflation falling too far below 2%.

Markets are now pricing in an 80% chance that rates will be lowered to 4.00% at the August meeting.

Traders also expect that there will be at least one further cut before the end of 2025.

ING added; “our base case is that the BoE cuts rates in August and November, and twice more in 2026.”

Simon Dangoor, head of fixed income macro strategies at Goldman Sachs added; “We continue to expect the bank to resume rate cuts in August, followed by a shift to consecutive reductions starting in November, ultimately bringing the bank rate down to 3.25%.”

Berenberg is not expecting further cuts this year due to upward pressure on costs; “As companies pass those costs on, inflation is likely to prove too stubborn for the Bank to cut again this year.”

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TAGS: Pound Dollar Forecasts Pound Euro Forecasts

• GBP/USD clings to modest gains near 1.3500 in the European session on Friday.
• The Bank of England left its policy rate unchanged at 4.25% as expected.
• Easing concerns over the US’ involvement in the Israel-Iran conflict helps the market mood improve.

GBP/USD trades modestly higher on the day at around 1.3500 after closing in positive territory on Thursday. The pair, however, could have a difficult time gathering bullish momentum in the near term.

The Bank of England (BoE) announced on Thursday that it maintained the bank rate at 4.25%, as expected. Three members of the Monetary Policy Committee (MPC), however, voted in favor of a 25 basis points (bps) rate cut, citing material further loosening in the labour market, subdued consumer demand and pay deals near sustainable rates. In the policy statement, the BoE reiterated that a gradual and careful approach to the further withdrawal of monetary policy restraint remains appropriate.

Although GBP/USD edged lower with the immediate reaction, the renewed US Dollar (USD) weakness helped the pair gain traction in the second half of the day.

Improving market mood on news of US President Donald Trump giving Iran another chance to make a deal to end its nuclear program and delaying his final decision on launching strikes for up to two weeks caused the USD to lose interest.

Early Friday, the data published by the UK’s Office for National Statistics showed that Retail Sales declined by 2.7% on a monthly basis in May. This reading came in worse than the market expectation for a decrease of 0.5% but failed to trigger a noticeable market reaction.

In the absence of high-impact data releases, market participants are likely to remain focused on geopolitics. A bullish opening in Wall Street could hurt the USD and help GBP/USD edge higher heading into the weekend. Nevertheless, investors could remain reluctant to bet on a persistent Pound Sterling strength following the BoE event.

GBP/USD Technical Analysis

GBP/USD climbed above the 200-period Simple Moving Average (SMA) on the 4-hour chart and the Relative Strength Index (RSI) indicator recovered slightly above 50, highlighting a loss of bearish momentum.

On the upside, 1.3520 (50-period SMA, 100-period SMA, Fibonacci 23.6% retracement of the latest uptrend) aligns as a strong resistance level before 1.3600 (static level, round level) and 1.3630 (end-point of the uptrend). Looking south, supports could be spotted at 1.3450-1.3440 (Fibonacci 38.2% retracement, 200-period SMA), 1.3400 (Fibonacci 50% retracement) and 1.3340 (Fibonacci 61.8% retracement).