Pound to Dollar Forecast: GBP Drifts Lower vs USD on BoE Rate Hold

March 20, 2025 - Written by Frank Davies

STORY LINK Pound to Dollar Forecast: GBP Drifts Lower vs USD on BoE Rate Hold

The Pound was on the defensive against the US Dollar on Thursday following the release of the Bank of England’s (BoE) latest interest rate decision.

At the time of writing, the Pound to Dollar exchange rate was trading at approximately $1.2965, down roughly 0.3% from the start of Thursday’s session.

Despite facing a downturn against the US Dollar (USD) due to the negative trading environment on Thursday, the Pound (GBP) managed to gain ground against most of its major trading partners.

This positive movement came in the wake of the Bank of England's recent interest rate decision.

As widely anticipated, the central bank maintained the interest rates at 4.5%, a decision that provided a boost to the Pound.

The bank's hawkish stance further reinforced confidence in Sterling, as it clearly communicated its commitment to a gradual and cautious approach in removing policy restraint.

On Thursday, the US Dollar climbed against most of its peers, even in the absence of any significant domestic data releases.

The ‘Greenback’s’ rise was mainly driven by the day’s market mood, which turned more risk-averse.

This shift in sentiment bolstered the safe-haven USD, particularly against riskier currencies, enabling the US Dollar to attract buyers despite the lack of economic catalysts.

Looking ahead, the main driver of movement for the Pound US Dollar exchange rate on Friday will likely be an economic data release from the UK.

The UK is set to publish its latest GfK consumer confidence index for March. If the data aligns with the expected decline, the Pound could face pressure and weaken by the end of the week.

On the US Dollar side, there are no domestic data releases scheduled for Friday, so the ‘Greenback’ is likely to trade primarily based on market sentiment as the week concludes.

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TAGS: Pound Dollar Forecasts