Pound to Dollar Forecast: GBP/USD "Neutral" as Markets Await 'Liberation Day'

April 2, 2025 - Written by Frank Davies

STORY LINK Pound to Dollar Forecast: GBP/USD "Neutral" as Markets Await 'Liberation Day'

The Pound (GBP) saw limited movement against the US Dollar (USD) on Tuesday as investors remained cautious ahead of President Donald Trump’s expected tariff announcement.

At the time of writing, the Pound US Dollar exchange rate (GBP/USD) was trading at around $1.2936, largely unchanged from Tuesday’s opening levels.

The US Dollar (USD) struggled for direction on Tuesday as investors weighed the potential impact of Trump’s planned tariffs on global trade.

The new measures are expected to target nations with large trade surpluses with the US and mirror the duties some countries impose on American goods.

Fears of retaliatory tariffs from key trading partners have unnerved markets, raising concerns that escalating trade tensions could disrupt global supply chains and slow economic growth.

While safe-haven demand for the US Dollar could increase, concerns that these policies may increase US recession risks appear to be capping USD’s upside.

Adding to these concerns, upcoming US data releases, including the ISM manufacturing PMI and JOLTs job openings, are expected to signal a cooling labour market and softer business activity.

The Pound (GBP) saw only modest gains on Tuesday, with investors optimistic that the UK could negotiate an exemption from Trump’s tariff measures.

Officials from both countries remain in discussions, and a recent conversation between Prime Minister Keir Starmer and President Trump was described as constructive.

Although a formal agreement may not be reached before the tariffs take effect on 2 April, the UK’s relatively small trade surplus with the US could reduce the risk of significant trade restrictions.

Looking ahead, aside from Trump’s tariff announcement, the GBP/USD exchange rate could also be influenced by the latest US ADP employment report on Wednesday.

If the data shows that job growth remained sluggish in March, it could weigh on the US Dollar, particularly as it may shape expectations for Friday’s non-farm payroll release.

Meanwhile, in the absence of key UK data, the Pound’s movement will likely be driven by global market sentiment and trade developments.

According to analysts at Scotiabank, GBPUSD short-term technicals are neutral in the short-term outlook.

"The moderation in momentum reflects the continued consolidation within a one-month range roughly bound between the mid- 1.28s and levels just above 1.30.

"Nearer-term price action offers support around 1.2880 and resistance just below 1.30."

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TAGS: Pound Dollar Forecasts