Pound to Dollar Forecast: "Downward Bias Toward 1.3395" say UoB

May 29, 2025 - Written by Frank Davies

STORY LINK Pound to Dollar Forecast: "Downward Bias Toward 1.3395" say UoB

The dollar secured net gains on Thursday after a US court ruled that the US Administration unilateral tariffs based on emergency legislation were not constitutional.

The bigger impact was a further decline in demand for safe-haven currencies with the yen and Swiss franc posting sharp losses. Asian currencies overall lost ground while the Pound was resilient in global markets.

The dollar failed to hold its best levels as Trump will not roll over and accept the Court’s judgement with all avenues explored to pursue his trade policy.

The decision will also inject another level of economic uncertainty, especially as the Administration will appeal against the ruling.

There was still an immediate boost to risk appetite with strong gains for equity futures.

US S&P 500 futures were around 1.5% higher and the FTSE 100 index will open higher

The Pound was also cushioned by stronger risk conditions with the Pound to Dollar (GBP/USD) exchange rate near 1.3450 from 1.3415 lows.


According to UoB; “Today, we expect GBP to trade with a downward bias toward 1.3395. A sustained break below this level seems unlikely.”

On a slightly longer-term view, it expects a 1.3330/1.3530 range rather than of a sustained decline

The Court of International Trade ruled that an emergency law invoked by the White House does not give the president unilateral authority to impose tariffs on international countries.

According to Court the US Constitution gives Congress exclusive powers to regulate commerce with other nations and this is not superseded by the president's remit to safeguard the economy.

It added that the International Emergency Economic Powers Act (IEEPA), a 1977 law that Trump cited to justify the tariffs, does not give him the power to impose the sweeping tariffs.

Tariffs based on the crackdown of fentanyl smuggling were also declared unconstitutional.

The sectoral tariffs in areas such as Aluminium and steel are not affected.


It gave the Administration 10 days to remove the tariffs.

The Administration will appeal against the decision and the tariffs will continue to be collected until the appeals are heard.

If the ruling is upheld, tariffs collected so far will have to be repaid.

MUFG commented; “The Trump administration has filed a notice of appeal with the US Trade Court, where it is very likely to go not just to the Court of Appeal but likely up to the US Supreme Court.”

Yunosuke Ikeda, head of macro research at Nomura commented; "It's almost impossible to know if the tariffs will be completely unwound by this. But in the hypothetical situation that they are, it's natural to see dollar appreciation."

He added; "Trump's tariffs will lead to stagflation pressure on the U.S. economy, so reversing those tariffs would be a positive for the dollar."

There will still be a high degree of uncertainty, especially as there will be an impact on tax revenue which will feed through into underlying market concerns over the budget deficit.

It is highly unlikely that the Administration will drop its trade campaign and it will explore all avenues to negate any legal impact.

MUFG added; “Our best sense right now for Asia FX markets is that the knee jerk reaction seen today in Asian currencies weakening and Dollar strengthening may not last. The crucial reasons are that the tariffs on Asia are likely to stay amidst the legal battle, coupled with the legal uncertainty also potentially crimping US growth and investment plans further.”

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TAGS: Pound Dollar Forecasts