Pound-to-Dollar Rate Attempts 3-Year Best, 1.3425 Key Resistance

April 23, 2025 - Written by David Woodsmith

STORY LINK Pound-to-Dollar Rate Attempts 3-Year Best, 1.3425 Key Resistance

The Pound to Dollar exchange rate touched a fresh 7-month high just below 1.3425 in Asia on Tuesday before a retreat to 1.3370.

The 1.3425 area remains a key resistance zone with five attempts to break above this level failing in September 2024.

Further tough resistance is likely, but any break would potentially trigger gains to 3-year highs and potentially to at least 1.3640.

MUFG noted that confidence in US assets appears to have deteriorated again with the dollar, equities and bonds all losing ground on Monday.

The 30-year bond yield was close to 4.90% and not far below the spike of 4.97% recorded earlier in April.

The S&P 500 index declined 2.4% on the day with all major indices in the red.

According to MUFG; “The triple selling of the US dollar, US bonds and US equities highlights that threats to the Fed’s independence are further undermining investor confidence in US assets alongside President Trump’s tariff policies which are encouraging a reallocation out of US assets in the near-term.”


President Trump has continued to attack Fed Chair Powell, demanding both his resignation and an immediate cut in interest rates.

Markets remain sensitive to the position of Fed Chair with wider central bank independence also a crucial element for the US dollar.

ING commented; “The reaction to Trump’s comments on the Fed indicates how sensitive markets are to the topic of Fed independence, and we believe this adds a new layer of bearish bias on the dollar.”

MUFG also noted the potential importance of a US Supreme Court ruling on whether his decision to fire board members of two other independent agencies, the National Labor Relations Board and the Merit Systems Protection Board, is legal.

The bank added; “If that precedent falls, it is thought that a decision to fire Powell could become a lot easier for President Trump. Fed Chair Powell has repeatedly stressed though that firing the Fed chair is not permitted by law.”

Domestically, Bank of England MPC member Greene stated that there would tend to be some downward pressure on prices from US tariffs with the potential for the UK becoming a destination for cheap goods from China and potentially the EU.

She added that a weaker dollar would be disinflationary for the UK economy.


According to Greene; "The tariffs actually represent more of a disinflationary risk than an inflationary risk.”

She was still concerned over domestic UK inflation pressure due to a lack of supply with particular concerns over the services sector.

Markets remain very confident that there will be a BoE rate cut at the May meeting.

Scotiabank commented; “BoE Gov. Bailey will also speak on Wednesday, providing an opportunity to manage expectations ahead of the next policy decision on May 8. Markets are currently pricing 21 bps of easing for the meeting and a cumulative 50bpts of easing by early August.”

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TAGS: Pound Dollar Forecasts