June 16, 2025 – Written by David Woodsmith

STORY LINK Pound-to-Euro Week Ahead Forecast: BoE Cuts to Weaken GBP Sterling

Foreign exchange strategists at RBC Capital Markets (RBC) see scope for the GBP/EUR exchange rate to strengthen to at least 1.20 over the next 2-3 months, provided risk conditions remain benign.

It does, however, forecast that the GBP to EUR rate will slide to 1.11 at the end of 2026.

In contrast, Scotiabank forecasts that the Pound Sterling can hold just above 1.20 against the Euro by the end of 2025

GBP/EUR dipped to 7-week lows during the week as evidence of a weaker labour market and GDP disappointment undermined the Pound. There was little net impact from the government spending review, although underlying reservations continued.

RBC sees a notable divergence between the short and medium-term views.

On a short-term view it commented; “As we head into the summer, GBP could stand to gain a bit more if markets settle into carry-hunting mode.”

The bank remains very cautious over the medium-term outlook; “As a long-term c/a deficit country, the UK runs a 280bn negative net international investment position with the rest of the world. It does not have the large stock of foreign assets invested in the US that the Euro area or Japan have.

RBC added; “It is also exposed to global trade wars as a small open economy and fiscally constrained in its ability to support growth through deficit spending.”

The Pound will inevitably be more vulnerable if the economy deteriorates.

The latest labour-market release suggested that there had been significant deterioration with a slide in payrolls, while unemployment hit a 4-year high and wages growth slowed more than expected.

GDP also contracted 0.3% for April after a 0.2% expansion the previous month.

HSBC commented; “our forecast is for a small fall back in Q2. That said, we should not over interpret. A negative GDP print in Q2 would not necessarily suggest recession risks, but payback from an artificially strong Q1.”

There are strong expectations that the Bank of England will hold interest rates at 4.25% in the week ahead. There is, however, speculation over more dovish guidance.

According to Danske Bank; “While markets have increasingly converged to our view of two further rate cuts from the BoE this year, we see risks further skewed to the downside. With slower activity and the scope for more aggressive BoE easing, we see this supporting our view a move higher in EUR/GBP, which we target at 0.87 in 6-12 months.” (GBP/EUR losses to just below 1.1500.)

According to Goldman Sachs; “We expect the labour market to loosen further in the coming months. A looser labour market is in turn likely to further reduce pay pressures.”

Commerzbank commented; “the market is now pricing in significantly more interest rate cuts by the Bank of England this year than at the beginning of the year. As we have emphasised several times, the path towards a stronger pound remains narrow, even if we do not want to overinterpret a single data release.”

Credit Agricole notes fundamentals reservations, but sees scope for Pound resilience; “Yet, as long as the UK economy continues to at least fare as well as the Eurozone, the GBP may still be able to eke out marginal gains over the EUR, especially as it retains a more compelling rate appeal.”

HSBC expects fundamentals will support the Euro; “Not only has the Eurozone growth narrative turned more positive following Germany’s large infrastructure and defence fiscal package, but the ECB has also returned the policy interest rate to the estimated neutral rate.

It added; “In contrast, the BoE has kept policy restrictive, some way above the estimated neutral rate. If UK data remain weak and CPI slows, markets may price more BoE rate cuts, which would likely weaken GBP against the EUR.”

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• GBP/USD trades in a narrow channel above 1.3550 on Monday.
• The BoE and the Fed will announce monetary policy decisions later in the week.
• The near-term technical outlook suggests that the bullish bias remains intact but lacks momentum.

GBP/USD holds its ground at the beginning of the week and trades in a tight band above 1.3550. Although the technical outlook suggests that the bullish stance remains unchanged in the near term, investors could refrain from taking large positions ahead of this week’s highly-anticipated Federal Reserve (Fed) and Bank of England (BoE) policy meetings.

The US Dollar (USD) benefited from safe-haven flows on Friday and caused GBP/USD to end the day in negative territory, as geopolitical tensions escalated after Israel launched a military operation against Iran.

Over the weekend, Iran and Israel continued to exchange missile strikes. A spokesperson for the Israeli military said on Monday that Israel has destroyed one third of Iran’s surface-to-surface missile launchers and added that they have achieved aerial superiority over Iran.

Meanwhile, Iranian foreign ministry spokesperson Esmaeil Baghaei said on Monday that the Iranian parliament is preparing a bill to leave the nuclear Non-Proliferation Treaty (NPT) and added that they remain opposed to developing of weapons of mass destruction, per Reuters. Following these developments, markets remain relatively cautious, helping the USD stay resilient against its peers.

The economic calendar will not feature any high-impact data releases on Monday. Ahead of the Fed and the BoE meetings, Retail Sales data from the US on Tuesday and Consumer Price Index data from the UK on Wednesday could trigger short-lasting market reactions.

GBP/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart stays slightly above 50 and GBP/USD trades above the 20-period, 50-period and the 100-period Simple Moving Averages (SMA), suggesting that the bullish bias remains intact in the short term but lacks momentum.

On the downside, the 100-period SMA forms the immediate support level at 1.3530 before 1.3460 (static level) and 1.3425 (200-period SMA). Looking north, resistance levels could be seen at 1.3600 (mid-point of the ascending channel), 1.3630 (static level) and 1.3700 (static level, round level).

Platinum price activated the bearish correctional track in Friday’s trading after hitting the barrier at $1305.00, to gather some of the gains by reaching $1215.00 achieving the suggested initial target.

The continuation of the main indicators contradiction makes us keep preferring the correctional track, which might target $1185.00 and $1162.00 level, while renewing the bullish attempts requires providing positive closes above $1275.00 level, to increase the chances for reaching new bullish stations.

The expected trading range for today is between $1185.00 and $1260.00

Trend forecast: Bearish

Platinum price activated the bearish correctional track in Friday’s trading after hitting the barrier at $1305.00, to gather some of the gains by reaching $1215.00 achieving the suggested initial target.

The continuation of the main indicators contradiction makes us keep preferring the correctional track, which might target $1185.00 and $1162.00 level, while renewing the bullish attempts requires providing positive closes above $1275.00 level, to increase the chances for reaching new bullish stations.

The expected trading range for today is between $1185.00 and $1260.00

Trend forecast: Bearish

June 15, 2025 – Written by Tim Boyer

STORY LINK Pound to Dollar Forecast: 40-Month Best, but “Room for Downside Correction”

The Pound to Dollar exchange rate (GBP/USD) jumped to a 40-month high just above 1.3630 late on Thursday as the dollar came under further pressure.

There was, however, a sharp retreat to lows near 1.3520 on Friday following Israel’s military strike on Iranian nuclear facilities before trading just below 1.3550.

There was renewed demand for safe-haven assets while the slide in risk appetite undermined the Pound in global markets.

According to ING, GBP/USD may be able to avoid sustained losses; “Cable has potentially a wide room for downside correction given how expensive it looks relative to rate differentials. But we have seen how structurally bearish USD bets are preventing dollar gains from being sustainable. So, we’d be more cautious on that side.”

UoB commented; “The likelihood of GBP closing above 1.3640 will remain intact as long as 1.3515 is not breached. Looking ahead, should GBP close above 1.3640, the focus will shift to 1.3700.”

A break below 1.3500 – 1.3515 would suggest a sharper correction.

MUFG noted the shift in trading dynamics; “In the FX market the initial response has been a flight to safety which has benefitted the Swiss franc, yen and US dollar.”

Commerzbank currency strategist Michael Pfister expects caution will prevail in the short term; “Until the danger of further escalation has passed, safe assets are likely to remain in demand.”

Danske Bank added; “The attack adds significant uncertainty to diplomacy, with US officials denying direct involvement while cautioning that it could either hinder or, unexpectedly, pressure Iran towards discussions.”

MUFG commented; “Market participants will now be watching closely to see how the conflict develops and whether it will have an actual disruptive impact on global supply chains including importantly the supply of oil.”

Rabobank discussed the potential implications; “the war between Israel and Iran, the likely involvement of the US and the possible involvement of other countries in the region, will take center stage today and in the coming days. Which scenario is going to develop?”

According to the bank; “The best-case scenario, which markets seem to be pricing in, is a short and fast operation that will deliver Israel and the US a major geopolitical victory. However, in terms of probability of this scenario unfolding, how easy is it is to take out an entire country with a relatively strong military in 24-48 hours?”

It added; “There are several escalation scenarios. The worst case is a long, drawn-out war that spreads to Hormuz and/or Saudi/UAE, and to global sites via proxies.”

The Pound is also liable to be hampered by reservations over the domestic economy and speculation over more dovish Bank of England guidance at next week’s policy meeting.

Danske Bank noted the weaker than expected GDP data released on Thursday; “The data yesterday follows weaker than expected labour market data out earlier this week and highlights that the UK economy is experiencing more underlying weakness following a strong start to the year.”

There are still doubts whether the dollar can gain sustained support.

Scotiabank commented; “The relative loss of investor appetite for U.S. assets is increasingly becoming a forecasting issue. Concerns about U.S. fiscal plan(s) have led to a rise in U.S. borrowing costs that have spread to other markets.”

Traders are also still very wary over tariff developments. President Trump stated that higher tariffs would be extended to domestic appliances.

According to ABN Amro; “The overall impact on the economy would not be favorable, and the repercussions for financial markets could be significantly worse. This reputational damage has arguably been a major factor driving the dollar’s devaluation in recent months.

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TAGS: Currency Predictions Pound Dollar Forecasts