The British pound is surging, and the momentum shows few signs of slowing, the chief executive of a leading independent financial advisory and fintech has predicted.
On Thursday, sterling climbed to its highest level in nearly four years, touching $1.3709 against the US dollar. This marks a 13% gain so far in 2025, making the pound one of the best performing currencies of the year.
“The pound is in flight right now and it is likely going higher,” said Nigel Green, CEO of deVere Group. “Several key forces are aligning that will keep sterling on the front foot for the foreseeable future.”
The rally comes as the dollar struggles under the weight of weakening US economic data, rising concerns over fiscal sustainability, and ongoing doubts about Washington’s trade and tariff policy direction under President Donald Trump’s administration.
“Dollar weakness is undoubtedly playing a role here, but it would be a mistake to attribute all of sterling’s strength to that alone,” said Green.
“We’re seeing structural changes in the UK economy that deserve recognition.”
Sterling’s rebound is even more striking when viewed in context. Just three years ago, the pound was reeling in the aftermath of former UK Prime Minister Liz Truss’s mini-budget, which triggered a dramatic sell-off in both the currency and UK government bonds.
“Sterling has come a long way since the chaos of 2022,” said the deVere founder.
“What we’re witnessing now is a re-rating of the currency as international investors regain confidence in the UK’s political and economic stability.”
The latest GDP figures show the UK economy expanded 0.7% in the first quarter of 2025, beating expectations and outpacing several major European economies. Consumer spending remains resilient, bolstered by stronger-than-expected wage growth.
Meanwhile, business investment is picking up following the announcement of a new trade agreement with the United States, finalised at the G7 summit earlier this month.
“Growth is picking up. Inflation is broadly under control. The jobs market remains solid. And the recent trade deal with the US is giving British exporters something to cheer about,” Green added.
The Bank of England, while holding interest rates steady at 4.25%, is expected to start easing later this year, though at a slower pace than the US Federal Reserve.
More cautious BoE
Markets are increasingly betting that the BoE will be more cautious about cutting rates too aggressively, especially given the improving economic backdrop.
“We expect the interest rate differential between the US and the UK to narrow over the coming months,” the deVere CEO said. “This will remove a key pillar of dollar strength and create further upside for sterling.”
Investor sentiment towards the pound has shifted decisively. Hedge funds and institutional investors have increased their long positions on sterling in recent weeks, betting on further appreciation.
The expectation is that the pound will likely breach the $1.40 level within the next 12 months, as the dollar remains under pressure and UK data continues to surprise on the upside.
“We are telling clients to prepare for sterling strength to remain a market theme well into 2026,” said Green.
“There’s a global push away from overreliance on the US dollar as a reserve currency. That macro trend adds another layer of support for alternatives like sterling.”
