Pound to US Dollar Forecast: GBP Hits 39-Month Best on Trump U-Turn

May 27, 2025 - Written by David Woodsmith

STORY LINK Pound to US Dollar Forecast: GBP Hits 39-Month Best on Trump U-Turn

The U.S. dollar has remained under pressure in global markets with the latest Trump U-Turn on tariffs reinforcing a lack of certainty and confidence in US policymaking. The dollar index dipped further to 1-month lows during the Asian session.

The Pound to Dollar (GBP/USD) exchange rate surged to a 39-month high just below the 1.3600 level before a limited retreat to 1.3570.

According to Scotiabank there is the possibility of GBP/USD gains to at least 1.40; “Spot gains are extending nicely above the downward-sloping channel (bull flag pattern) that developed over the past month, implying the risk of another, fairly quick and significant jump (~700bps) in the pound over the next 1-2 months. Resistance is 1.3740/50 and 1.40.”

Just after the Asian market open on Monday, US President Trump announced another shift in trade policy.

On Friday, he stated that he recommended putting a 50% tariff on EU exports to the US from June 1st due to the fact that US-EU talks were making no headway.

EU Commission President von der Leyen lobbied over the weekend that the EU needed more time to reach a good deal.

Trump has now stated that there will be a delay until July 9th. This is the date when all reciprocal tariffs announced in April are due to come into effect following the 90-day pause.


Markets had expected that Friday’s move was a negotiating tactic designed to force EU concessions, lessening the surprise element, but there was still significant relief and market reaction.

UK and US markets are closed on Monday, but FTSE equity futures posted significant gains which helped underpin the Pound in global markets.

Overall confidence in the dollar has continued to deteriorate, illustrated by the fact that the US currency dipped both on Friday and Monday.

A key element is a lack of certainty, especially as there are also important reservations over fiscal policy following last week’s approval by the House.

Hard-line Republicans want a much greater commitment to control spending in the budget which will set the stage for tough battles in the Senate during June.

According to Commerzbank; “Last Friday's comments were a reminder of Trump and the administration’s unpredictable and seemingly incoherent policies and decision-making.”

OCBC currency strategist Christopher Wong commented; "It still is largely a 'sell dollar story. The policy unpredictability surrounding Trump's tariffs and of course, the erosion of the U.S. exceptionalism, this could potentially still undermine sentiment and the confidence in the medium term."


National Australia Bank head of FX research Ray Attrill took a similar view; "The 'Sell America' theme, which obviously was the dominant theme back in April, is back on show."

Tariffs and currency policies are also intrinsically linked with speculation that the US Administration will push for stronger global currencies, especially in Asia.

MUFG commented; “USD weakness has been driven by building speculation that the Trump administration is putting pressure on other countries to allow their currencies to strengthen against the USD as part of deals to prevent higher “reciprocal tariffs” from being implemented after 9th July deadline.”

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TAGS: Pound Dollar Forecasts