GBP/USD Forecast: Pound Weakens Against Stronger Dollar Despite Downbeat US GDP

May 1, 2025 - Written by Frank Davies

STORY LINK GBP/USD Forecast: Pound Weakens Against Stronger Dollar Despite Downbeat US GDP

The Pound-to-Dollar exchange rate softened on Wednesday after the release of the US’s latest GDP data and core PCE price index.

At the time of writing, GBP/USD was trading at approximately $1.3348, down roughly 0.5% from the start of Wednesday’s session.

On Wednesday, the US Dollar (USD) managed to climb against most of its peers, despite the release of two economic data points that fell short of forecasts.

First, the latest US GDP reading dropped from 2.4% to -0.3%, well below the expected 0.3%, ramping up concerns about a potential US recession.

Later, the core PCE price index, the Federal Reserve's preferred inflation gauge, cooled from 3% to 2.6%, in line with market expectations, which led to increased bets on a Federal Reserve interest rate cut.

Despite these economic indicators, the Dollar maintained its strength and gained ground against the majority of its counterparts.

On Wednesday, the Pound (GBP) struggled to attract buyers and lost ground against several major currencies amid a lull in UK economic data.


The decline in Sterling was mainly fuelled by growing expectations of an interest rate cut by the Bank of England (BoE) at their upcoming policy meeting next week.

As markets are now almost entirely pricing in a 25 basis-point interest rate cut, Sterling had little to no positive economic factors to bolster its performance, making it challenging for the currency to gain traction with investors.

Looking ahead to Thursday, the main driver of movement for the Pound US exchange rate will likely be the release of some US economic data.

The US is set to publish its latest ISM manufacturing PMI data for April, which is forecast to dip further into contraction territory (a reading below 50).

If the data meets these expectations, the USD could weaken as we approach the end of the week.

For the Pound, the UK economic calendar will remain sparse for the remainder of the week, meaning GBP exchange rates are likely to be influenced by broader market sentiment.

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TAGS: Pound Dollar Forecasts