GBP/USD Forecast: Pound Sterling Flat vs Dollar as Markets Await 'Liberation Day'

April 1, 2025 - Written by David Woodsmith

STORY LINK GBP/USD Forecast: Pound Sterling Flat vs Dollar as Markets Await 'Liberation Day'

The Pound to Dollar exchange rate fluctuated within a narrow range at the start of the week as investors awaited further developments on US trade policy.

At the time of writing, GBP/USD was trading at $1.2941, showing little change from its opening level.

The Pound (GBP) saw muted movement on Monday, with a quiet economic calendar offering little direction for the currency.

Additionally, the broader market sentiment was subdued as traders anticipated a fresh wave of tariffs from US President Donald Trump.

Trump has labelled 2 April as ‘liberation day’, marking the date when the US is set to impose reciprocal tariffs on all trading partners.

Concerns over a potential global trade war and its repercussions on economic growth weighed on investor sentiment, keeping the Pound in check.

Similarly, the US Dollar (USD) remained subdued despite an overall risk-averse market mood.

Typically, the safe-haven ‘Greenback’ benefits during periods of uncertainty. However, fears that Trump’s aggressive trade stance could tip the US economy into recession dampened demand for the currency.

Reinforcing these concerns, Goldman Sachs recently raised its probability of a US recession over the next 12 months to 35%, up from its previous estimate of 20%.

Looking ahead, the UK economic calendar remains relatively quiet, meaning Sterling’s movement is likely to be dictated by broader market trends.

On the US side, Tuesday’s ISM manufacturing PMI release could weigh on the US Dollar if factory activity is shown to have contracted in March.

However, the primary driver of USD volatility is expected to be Trump’s tariff plans. As these reciprocal tariffs come into effect on Wednesday, the US Dollar may experience sharp fluctuations. While a risk-off market mood could boost safe-haven demand for USD, fears of an economic downturn may exert downward pressure.

Any unexpected changes – such as last-minute concessions or delays – could also add to market turbulence, keeping traders on edge as the week unfolds.

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TAGS: Pound Dollar Forecasts