**2025 Pound to Dollar Week Ahead Forecast: GBP/USD Struggles Below 1.36, Traders Focus on Jackson Hole**
*Original analysis by James Skinner, ExchangeRates.org.uk, adapted and expanded for in-depth coverage.*
The Pound Sterling (GBP) endured a turbulent week against the US Dollar (USD), finishing below a key psychological level of 1.36 amid global risk aversion and persistent strength in the greenback. As the market turns its attention to the much-anticipated Jackson Hole Symposium, traders are carefully parsing economic data, central bank communications, and broader macroeconomic signals for indications on the next significant move in the GBP/USD currency pair.
—
**Pound Under Pressure: A Review of Recent Performance**
The GBP/USD currency pair, often referred to as “Cable,” slipped to its lowest levels in weeks, primarily dragged down by:
– Robust US economic indicators that bolstered the Dollar
– Heightened market caution prompted by global risk sentiment
– Cooling expectations for an imminent Bank of England (BoE) interest rate hike
– A cautious tone in BoE policymaker comments
Sterling’s weekly decline reflects not only the US Dollar’s dominance amid global uncertainty, but also mounting questions about the resilience of UK growth and inflation prospects.
**US Dollar Resilience: Factors Driving Greenback Strength**
The US Dollar Index (DXY) soared as investors once again flocked to the Dollar’s perceived safety, fuelled by:
– Stronger-than-expected US retail sales and industrial production data
– Upward surprises in recent inflation prints, with July’s CPI holding firm
– Cooling off in expectations for a Federal Reserve policy pivot, as various Fed officials hinted at a prolonged period of higher rates
– A broad market risk-off mood, with equities volatile and commodities under pressure
All these factors pushed GBP/USD sharply lower, moving decisively below the 1.36 mark after having traded in a tighter range for much of the prior month.
**UK Economic Picture: Reasons for Sterling’s Vulnerability**
The fundamental backdrop in the UK has shown some cracks, putting the Pound at a disadvantage compared to its major counterparts.
– **Weaker GDP and growth indicators:** UK Q2 GDP came in at virtually flat, with July data showing further signs of stagnation. Forward-looking surveys such as the PMIs point to barely positive readings for services and ongoing contraction in manufacturing.
– **Labour market cooling:** While unemployment remains historically low, recent figures showed job vacancies and wage growth beginning to slow, raising concerns that the UK labor market might finally be loosening.
– **Inflation outlook:** Though inflation remains above the BoE’s target, headline rates have been dropping gradually, reducing the imperative for immediate policy tightening.
– **BoE signals caution:** Governor Andrew Bailey and other Monetary Policy Committee members struck a distinctly cautious tone in statements, suggesting that interest rates may remain on hold for the foreseeable future.
Taken together, these trends have dampened expectations for Sterling, especially as they contrast with the continued resilience of the US economy.
—
**Key Event Ahead: Jackson Hole Symposium in Focus**
A central focus for markets this week is the Federal Reserve’s Jackson Hole Symposium, which historically marks a turning point or at least offers fresh insight into the US central bank’s policy trajectory.
**Why Jackson Hole Matters for GBP/USD:**
– Central bank heads, including Fed Chair Jerome Powell, will deliver keynote remarks watched for hints on rate policy
– Any perceived signal on delaying or advancing interest rate cuts could dramatically shift the Dollar’s outlook
– The context of this year’s symposium is critical, given sticky US inflation, mixed data, and political pressure ahead of key US and UK elections
– The Bank of England’s forward guidance may also attract attention, especially if Governor Bailey or other BoE officials clarify their view on the UK’s next monetary policy steps
**Scenarios for GBP/USD Post-Jackson Hole:**
– *Hawkish Fed, Dovish BoE
Read more on GBP/USD trading.