The British pound bulls are gaining strength! It continues to rise against the US dollar and the euro. What will the future trend be?
The British pound has recently risen against the US dollar and the euro, with Bank of America predicting that by the end of 2025, the pound will rise to 1.43 against the dollar, but JPMorgan Chase warns of the risk of a weaker pound. The pound has cumulatively risen over 7%, reaching a new high since 2022 on April 28. Bank of America is optimistic about the pound's prospects, forecasting it will rise to 1.54 by the end of 2026, while JPMorgan Chase believes the pound's strength may be temporary, and global tariff policies could negatively impact the UK economy. A Reuters survey indicates that the Bank of England is expected to cut interest rates by 25 basis points on May 8
Investment Insights - Bank of America is optimistic about the British pound's trend, predicting that the GBP/USD exchange rate will rise to 1.43 by the end of 2025. However, JPMorgan warns of the risks of a weakening pound.
Since the beginning of 2025, the GBP/USD has cumulatively risen over 7%. On April 28, it briefly reached 1.3444, marking a new high since 2022.
In addition, the GBP/EUR has also shown a rebound in the past two weeks, indicating strong bullish sentiment for the pound.
【Source: TradingView; 2025 GBP/USD trend】
【Source: TradingView; 2025 GBP/EUR trend】
Investors generally believe that in a tariff-focused market, the UK economy relies more on the service sector, has less export of American goods, and given that the 10% tariff imposed by the US on the UK is much lower than that imposed on other economies, along with smoother negotiations for the US-UK trade agreement, the pound's exchange rate should benefit from this What will the future trend of the British pound exchange rate be?
Bank of America believes that the US dollar will remain weak, and in this context, it holds an optimistic outlook for the British pound. It predicts that the pound will rise to 1.43 against the dollar by the end of 2025 and further to 1.54 by the end of 2026.
Additionally, Bank of America expects the pound to maintain a stable exchange rate against the euro, especially as the UK seeks to strengthen ties with the EU in defense and security.
Other institutions have different views.
JP Morgan stated that the strengthening of the pound due to a potential US-UK trade agreement may be short-lived. The spillover effects of global tariff policies on the UK economy, along with the lack of fiscal flexibility in the UK, mean that the pound may actually suffer losses.
In other words, if US tariffs harm the global economy, the pound may weaken.
Mitsubishi UFJ indicated that as UK economic data paves the way for further gradual interest rate cuts, the pound may continue to perform poorly against the euro.
According to a recent Reuters survey, 67 economists predict that the Bank of England will lower the benchmark interest rate by 25 basis points to 4.25% on May 8. It is expected that by the end of 2025, the Bank of England will cut the benchmark interest rate by 25 basis points each quarter, down to 3.75%
