Pound-to-Dollar Rate Now Pushing to 1.34, Sterling's 2024 Best in Sights

April 16, 2025 - Written by Frank Davies

STORY LINK Pound-to-Dollar Rate Now Pushing to 1.34, Sterling's 2024 Best in Sights

The US Dollar has been back under pressure in Asia overnight with fresh unease over US-China trade wars and renewed selling in equities.

The Pound to Dollar exchange rate (GBP/USD) surged again to fresh 6-month highs close to 1.3290 and held firm despite a slightly softer-than-expected UK inflation reading.

According to ING; “GBP/USD is dominated by the soft dollar story and has last year's highs of 1.3430 in its sights.”

Scotiabank added; “GBP/USD is now pushing toward the late Q3/early Q4 highs around 1.34.”

The latest setback for the dollar and risk appetite was triggered by Microchip maker Nvidia which expects an additional $5.5bn in costs after the US government tightened export rules to China.

As far as the economy is concerned, the latest US retail sales data will be released later Wednesday with expectations that buying ahead of tariffs helping to underpin spending.

ING expects that comments from Fed Chair Powell will be more important. There were dovish comments from Governor Waller on Monday with suggestions that interest rates would be cut even with higher inflation


According to ING; “a similarly dovish speech from Powell tonight could weigh on the dollar.”

There are also underlying concerns that the Administration will look to replace Powell with a Fed Chair who will back faster rate cuts.

Danske Bank commented; “The usual macro drivers are no longer behaving as expected, reinforcing our view that the USD is losing its traditional anchors.”

The headline UK inflation rate declined to 2.6% for March from 2.8% previously and slightly below consensus forecasts of 2.7%.

The core rate edged lower to 3.4% from 3.5% and in line with market expectations.

The largest downward contributions came from recreation and culture, together with motor fuels, offset to some extent by higher clothing prices.

The CPI goods inflation rate declined to 0.6% from 0.8% while the services sector rate retreated to 4.7% from 5.0%.


Inflation will increase again in the short term with an increase in utility prices and annual resets putting upward pressure on prices.

ING commented; “wrap all of that together, and we see April’s CPI figure at 3.2%, rising to 3.5% or maybe even a tad higher towards the end of the third quarter.”

Pantheon Economics expects an increase to 3.5% for April with a September peak of 3.7%.

Markets expect a May Bank of England rate cut with two further cuts over the remainder of 2025.

ING does expect further progress on services-sector inflation; “We expect services CPI to dip to 4.6% in April and drop lower still in May.”

ING added; “More benign services inflation, if it materialises, is unlikely to be a catalyst for the Bank to speed up the pace of cuts – but it would help cement one rate cut per quarter for the rest of 2025 and into 2026.”

Pantheon’s chief UK economist Rob Wood added; “It’s a finely balanced call, but we look for back-to-back 25bp cuts in May and June, with another cut in November. That call is highly sensitive to President Trump’s actions, the dataflow and the MPC’s comments.”

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TAGS: Pound Dollar Forecasts