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The British Pound (GBP) strengthens against the U.S. Dollar (USD) as tariff-related uncertainty undercuts demand for the Greenback.
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Renewed trade tensions, triggered by former President Trump's tariff threats, push the U.S. Dollar Index (DXY) to multi-year lows.
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Despite GBP/USD’s short-term rebound, dovish Bank of England expectations and upcoming U.S. inflation data keep downside risks in play.
Pound Sterling Rises Against US Dollar Amid Tariff Uncertainty; Inflation, BoE Outlook in Focus
The Pound-Sterling (GBP) climbed toward the 1.3600 level against the U.S. Dollar during European trading on Thursday, buoyed by growing weakness in the greenback. The U.S. Dollar Index (DXY) slipped to a fresh three-year low near 97.80, as investor sentiment was shaken by renewed uncertainty over former President Trump’s tariff policy.
Trump warned on Wednesday that letters would be sent to trade partners who have not submitted proposals or are not negotiating in good faith, outlining U.S. trade terms and tariff rates — a move that unsettled global markets and dampened demand for the Dollar.
GBP/USD Forecast: Near-Term Pressure Remains Despite Recent Rebound
After dropping to a weekly low near 1.3450 on Tuesday, GBP/USD managed a modest recovery, holding steady around 1.3500 in early Wednesday trading. However, the technical outlook continues to lean bearish in the short term, particularly as markets brace for key U.S. inflation data. A hotter-than-expected reading could revive USD strength and pressure the Pound.
Additionally, recent UK labor market figures added to the downside risks for Sterling. The data showed a rise in the unemployment rate alongside softer-than-forecast wage growth, reinforcing expectations that the Bank of England (BoE) may move to cut interest rates multiple times in the coming months. This dovish monetary policy outlook continues to weigh on GBP sentiment, even as the pair finds temporary relief from USD weakness.
