ExchangeRates.org.uk – The Pound to Dollar (GBP/USD) exchange rate has settled below the 1.3000 level.Bank of America (NYSE:BAC) does see the risk of a near-term GB/USD slide towards 1.26 amid trade fears, but is notably bullish on the medium-term outlook amid a solid Pound performance and sustained dollar losses.
It forecasts GBP/USD gains to 1.44 at the end of 2025 with further gains to 1.56 the following year.
Bank of America notes that markets were very bullish on the dollar early in 2025 amid expectations of business-friendly policies, together with tax cuts and deregulation.
It considers that the reality has been notably different from expectations with a greater focus on cutting spending while tariff policies have been more aggressive than expected.
In this environment, the bank has downgraded its growth forecasts while inflation projections have been revised higher, increasing the threat of stagflation in the economy.
These concerns have prevented the dollar gaining defensive support while market sentiment towards the US currency has soured.
BoA also notes that the German budget bazooka has boosted the European outlook.
The bank is broadly positive on the Pound outlook with services-sector dominance helping to protect the economy from the worst impact of US tariffs.
The bank is, however, nervous over the threat of a wider slide in global risk appetite.
This content was originally published on ExchangeRates.org.uk
