Pound Climbs 7.5% vs Dollar in 2025

2025-12-31 11:03 By Joana Ferreira 1 min. read

The British pound traded at $1.34, marking a 7.5% gain against the US dollar in 2025, its largest annual rise since a 9.5% jump in 2017.

Sterling benefited from diverging expectations over rate cuts by the Bank of England and the Federal Reserve in 2026, as well as a largely uneventful Autumn budget, which eased pressure on the currency in the second half of the year.

The Bank of England cut borrowing costs four times in 2025, though policymakers remained split and signaled that the already gradual pace of cuts could slow further.

In the US, investors priced in additional easing in 2026 amid signs of a cooling labor market.

Domestic political concerns and stagnant growth in the UK tempered the pound’s gains.

Against the euro, however, sterling fell more than 5% to 87.2 pence, its largest annual drop versus the single currency since 2020.



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