Bank Of America Pound To Dollar Forecast: GBP/USD At 1.40 By End-2025 - Exchange Rates Org UK
At a Glance
Bank of America forecasts the GBP/USD exchange rate to reach 1.40 by the end of 2025, signifying a bullish long-term outlook for the pound against the dollar. Current market consensus reflects a more cautious progression, with targets spread between 1.3300 and 1.3800 over similar time frames, suggesting BofA's position holds significant upside potential if realized.
Key Takeaways
- 01Bank of America predicts GBP/USD to reach 1.40 by end-2025.
- 02Current consensus targets are lower at 1.3500 to 1.3800.
- 03Market sentiment shows divergence with other firms holding conservative views.
Full Analysis
What the desk is arguing
Bank of America's projection of GBP/USD hitting 1.40 by the end of 2025 suggests a positive outlook for the pound as it appears to rebound from its recent lows. With current trading around 1.3100, the forecast implies a moderate appreciation driven by potentially favorable economic conditions and interest rate adjustments in the UK.
In contrast, the current consensus among major banks paints a more nuanced view, with targets not venturing past 1.3800. This juxtaposition indicates that the market is currently pricing in a more stable or cautious approach towards UK economic growth compared to BofA's optimistic stance on potential monetary policy shifts.
Where it sits in our coverage
The current median consensus for GBP/USD from various banks is 1.3500 for March 2026 and 1.3800 for June 2026, showcasing a range that encapsulates lower forecasts compared to BofA's 1.4000 target for December 2026. Notably, while most forecasts cluster closely, BofA's more optimistic outlook could suggest an increasing divergence in sentiment as market dynamics evolve.
Specific firms offer varying perspectives, with targets as follows: - JPMorgan: Dec-26 target at 1.3600 - Morgan Stanley: Dec-26 target at 1.4700 - Deutsche Bank: Dec-26 target at 1.4200
How other firms see it
The market sentiment surrounding GBP/USD is split, with several firms adopting a more conservative perspective compared to BofA’s prediction. For instance, Goldman Sachs and ING both project lower targets for March 2026, aligning with an overall cautious outlook.
Key firms with differing stances include: - Goldman Sachs: March 2026 target at 1.3300 - ING: March 2026 target at 1.3500 - Morgan Stanley: March 2026 target at 1.3800
Market Implications
Should BofA's bullish forecast materialize, it would indicate a significant turnaround in GBP sentiment, possibly reflecting a shift in monetary policy or improved economic conditions in the UK. However, the divergence from the broader market consensus suggests a degree of skepticism among other banks regarding reaching such levels in the near term.
GBP/USD — All Desk Targets
| Firm | Stance | YE 2026 |
|---|---|---|
Goldman Sachs | Bullish | 1.3600 |
MUFG | Bullish | 1.4000 |
J.P. Morgan | Bearish | 1.2800 |
From the original
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