The Pound Rises as the Dollar Falls: What’s Fueling GBP Strength in 2025?

The British Pound is in the news again because it is rapidly gaining ground against the US Dollar and reaching new multi-year highs. The GBP is up 0.6% as of June 26, 2025, and is trading near the 1.3750 level.   This gain is a market reaction to declining US interest rates and cautious signals from the Federal Reserve, which have caused the US dollar to weaken in currency markets worldwide.

Why is the pound going up?

Shaun Osborne and Eric Theoret, Scotiabank’s Chief FX Strategists, said the Pound’s momentum remains robust. Technical indicators such as the Relative Strength Index (RSI) remain below overbought levels, implying that the rally may have more room to build.   There has been a test of significant resistance around 1.3750, and there is no major issue until the psychologically important 1.40 level.

At the same time, the Bank of England’s interest rate projections remain constant. Even if some domestic data, such as a decline in CBI retail sentiment, is concerning, markets still anticipate two minor rate cuts by the end of the year. This demonstrates that they remain optimistic about the UK’s economic outlook.

The global mood and market psychology

Investors are interested in the differences between US and UK monetary policies.   The Pound is benefiting from the UK’s relative stability, as the Fed becomes more cautious.   This trend is being bolstered by medium-term support at the 50-day moving average, which is now reaching 1.3430.

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