Pound Sterling to Dollar Forecast: GBP Price Eyes 1.35 Resistance

May 6, 2025 - Written by David Woodsmith

STORY LINK Pound Sterling to Dollar Forecast: GBP Price Eyes 1.35 Resistance

The Pound US Dollar (GBP/USD) exchange rate advanced on Tuesday, in advance of the Federal Reserve’s interest rate decision on Wednesday.

At the time of writing, GBP/USD was trending near $1.3324. Up approximately 0.2% from the day’s opening level.

The US Dollar (USD) drifted lower on Tuesday amid investor caution ahead of the Federal Reserve’s imminent policy announcement.

With interest rates expected to remain unchanged, market attention is focused on the potential tone Fed Chair Jerome Powell’s will strike in his press conference and any clues he may drop about future monetary policy.

USD investors will be watching closely to see if the Fed expresses concern over slowing economic momentum and hints at the possibility of rate cuts in the months ahead.

At the same time, anxieties over US President Donald Trump’s trade policy also limited USD, following complications in talks with Japan.

Negotiations hit a roadblock as Japan rejected any proposal that maintained existing tariffs, a blow to hopes of a quick resolution.


Hopes for a refreshed UK-EU trade relationship helped to underpin the Pound (GBP) on Tuesday.

GBP investors are hopeful that a new ‘strategic partnership agreement’ to be signed at a summit on 19 May will lead to stronger economic ties between the UK and the continent.

This could offer a much-needed boost to the UK economy, although observers also warn it could complicate UK-US trade negotiations.

Looking ahead, the US Federal Reserve’s rate decision will act as the main catalyst for movement in GBP/USD over the coming sessions.

While a rate hold is priced in, attention will turn to Powell’s comments and whether the Fed signals a dovish shift.

However, President Trump’s reaction could generate just as much volatility. Any renewed criticism of the central bank or calls for immediate rate cuts might reignite fears over Fed independence, potentially dragging the US Dollar lower.

Meanwhile, investors may adopt a wait-and-see stance on the Pound ahead of the Bank of England’s interest rate decision on Thursday, limiting GBP movement in the short term.

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TAGS: Pound Dollar Forecasts