GBP/USD Forecast: Pound Sterling Ticks Up vs Dollar despite Downbeat Trade

March 4, 2025 - Written by Frank Davies

STORY LINK GBP/USD Forecast: Pound Sterling Ticks Up vs Dollar despite Downbeat Trade

Pound Sterling (GBP) firmed against the US Dollar (USD) on Tuesday despite the days negative trading conditions.

At the time of writing, the Pound US Dollar exchange rate was trading at approximately $1.2735, up roughly 0.3% from the start of Tuesday’s session.

On Tuesday, the US Dollar (USD) had difficulty attracting buyers and weakened against several of its major counterparts.

While the 'Greenback' did recover somewhat from Monday's losses following a Europe-led initiative to bring peace to Ukraine, USD exchange rates remained largely under pressure during Tuesday's European trading session.

Moreover, despite a risk-averse market environment, the US Dollar failed to leverage its safe-haven status as geopolitical concerns and worries about the US economy diminished USD's appeal.

On Tuesday, the Pound (GBP) traded within a broad range, maintaining its position against many currencies while showing some weakness in others.

This volatility was primarily due to the lack of UK economic data and a generally cautious market sentiment.

After Monday's positive trading, the market's negative mood on Tuesday dampened the risk-sensitive nature of Sterling.

Investors were also hesitant to make significant moves on the Pound, ahead of important data releases later in the week.

On Wednesday, the key driver for the Pound US Dollar exchange rate will likely be the release of the latest services PMIs
from both the UK and the US.

The UK's services PMI for February are expected to show a slight improvement. If the data meets these expectations, it could provide a boost to the Pound.

Additionally, Bank of England (BoE) Governor Andrew Bailey is set to deliver a speech. If his comments lean towards a
more hawkish stance, it could further strengthen the Pound.

For the US Dollar, the latest ISM services PMI for February is also forecast to rise, which could support the 'Greenback' in mid-week trading.

Moreover, the US will release its January factory orders, which are expected to show a rebound. This positive data could
further strengthen the USD exchange rates.

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TAGS: Pound Dollar Forecasts