Modified: Friday, 8 August 2025 06:51 BST

– Written by


Frank Davies

STORY LINK Pound to Dollar Forecast: GBP/USD Eases on Fed Chair Speculation

The Pound to Dollar exchange rate (GBP/USD) posted 10-day highs just above 1.3435 following the Bank of England policy decision. The Pound overall held firm, but GBP/USD failed to hold its peak levels and edged lower as the US currency secured a tentative recovery in global markets.

Latest reports from the US suggest that current Federal Reserve Governor Waller is now the leading candidate to become the next Fed Chair to succeed Powell next year.

Waller had previously been a hawkish member on the Fed Board, but changed his stance this year and voted to cut rates at the July meeting.

There is little doubt that Waller would advocate for lower interest rates in the near term, but his appointment would ease fears of a very aggressive policy to cut rates.

There is, however, still the risk that Trump will not follow his team’s advice and he also still has to nominate a replacement for Governor Kugler who will leave her post on Friday.

As far as US data is concerned, initial jobless claims increased to 226,000 in the latest week from 219,000 previously while continuing claims increased to 1.97mn from a revised 1.94mn previously which suggests gradual labour-market deterioration.

Markets are pricing close to a 95% chance that the Federal Reserve will cut interest rates at the September meeting and the most likely outcome is for three rate cuts by the end of 2025.

The Pound overall has held firm in global markets following the relatively hawkish Bank of England rate cut.

Markets are no longer confident that there will be a further rate cut at the November meeting.

MUFG head of research for global markets Derek Halpenny commented; “Based on the voting composition in this MPC meeting (5-4 versus 5-2-2 in May) and other elements of today’s announcement this is obviously a more hawkish policy announcement and we have seen some of the expectations for a Nov rate cut taken out of the market.

It added; “It’s clear that the pick-up in the estimate of inflation peaking at 4.0% has made some uncomfortable with the idea of continued steady easing.”

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TAGS: Pound Dollar Forecasts