Pound to Dollar Rate Holds $1.2600 as Trump Tariff Threats Dominate FX Markets

February 20, 2025 - Written by Frank Davies

STORY LINK Pound to Dollar Rate Holds $1.2600 as Trump Tariff Threats Dominate FX Markets

GBP/USD was subdued on Wednesday after the UK released its latest consumer price index (CPI).

At the time of writing, the Pound to Dollar exchange rate GBP/USD was trading at approximately $1.2617, virtually unchanged from the start of Wednesday’s session.

On Wednesday, the Pound (GBP) failed to attract much investor interest against most of its peers despite releasing the UK's latest inflation figures.

The latest data showed that both headline and core inflation increased in January.

Headline inflation rose from 2.5% to 3.0%, surpassing the expected 2.8%, while core inflation climbed from 3.2% to 3.7% as predicted.

Although this data weakened expectations for a Bank of England (BoE) interest rate cut in March, the Pound didn’t benefit from the positive news and remained largely muted against other currencies.

On Wednesday, the US Dollar (USD) wavered against most of its peers and even declined against several riskier currencies as investors awaited the latest FOMC meeting minutes.

The USD's decline was likely driven by a cautiously optimistic market sentiment, which reduced the demand for the safe-haven currency.

Additionally, investors were likely hesitant to make aggressive moves on the ‘Greenback’ before the release of the Federal Reserve’s latest meeting minutes, scheduled for the evening.

If the Fed maintains its recently hawkish stance, the minutes could spark a rebound for the US Dollar.

Moving forward, the main driver of movement for the Pound US Dollar exchange rate on Thursday will likely be a series of mid-tier data
releases from both the UK and the US.

For the Pound, the UK will publish its latest CBI industrial trends order survey, while the US will release its most recent initial jobless claims figures.

These data points can potentially introduce new volatility into the GBP/USD exchange rate, mainly if they differ from market expectations.

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TAGS: Pound Dollar Forecasts