Pound to Dollar Forecast: GBP's Momentum is "Firmly in Bullish Territory"

June 4, 2025 - Written by Frank Davies

STORY LINK Pound to Dollar Forecast: GBP's Momentum is "Firmly in Bullish Territory"

The Pound-to-Dollar exchange rate (GBP/USD) found support close to 1.3500 on Wednesday and was initially held in tight ranges.

Weaker-than-expected US data, however, triggered renewed dollar losses with GBP/USD surging to just above 1.3550. Traders will be targeting 39-month highs close to 1.3600.

Scotiabank is still bullish on the Pound; “the multi-month trend is bullish, and momentum is firmly in bullish territory with an RSI at 60. The DMI’s are providing confirmation, along with the MACD. The near-term range is defined by support below 1.3450 and resistance above 1.3550.”

According to UoB; “the likelihood of GBP closing above 1.3600 will grow in the next few days as long as the ‘strong support’ level at 1.3470 is intact.

The US ADP jobs data recorded an increase in private payrolls for May of 37,000 for May compared with consensus forecasts of a 111,000 increase.

The April increase was also revised marginally lower to 60,000 from the flash estimate of 62,000.

There was an increase in jobs for medium-sized businesses, but losses on the month for small and large companies.


According to ADP chief economist Dr. Nela Richardson; "After a strong start to the year, hiring is losing momentum. Pay growth, however, was little changed in May, holding at robust levels for both job-stayers and job-changers."

The ISM non-manufacturing business confidence index dipped to an 11-month low of 49.9 for May from 51.6 previously and well below consensus forecasts of 52.0.

There was a sharp decline in orders, but employment did edge higher on the month.

Prices increased at a faster rate with the strongest reading since December 2022.

The data will reinforce fears over stagflation in the US economy with a weaker economy combined with increased inflation. Markets are also still fretting over tariffs.

The 50% tariffs on aluminium and steel imports went into effect on Wednesday, further increasing underlying uncertainty.

According to the UK government, it will not be subjected to 50% tariffs on steel and aluminium with these remaining at 25% for the time being, but this may be of small comfort.


Paul Donovan, chief economist at UBS Global Wealth Management, commented, "UK steel exports were supposed to incur no tariff, so Trump's abrupt change may cause UK negotiators to question the value of 'agreements' made."

Scotiabank commented on the global dimension; “Meanwhile, the shifting sands of US tariff policy have to make it harder for countries to negotiate effectively with the US.

It added; “There’s another 5 weeks of the current tariff reprieve to run but there’s no real sense that certainty for businesses will improve anytime soon.”

According to Commerzbank; "One of the most important arguments against the greenback is the unpredictable US (tariff) policy, which could cause considerable damage to the US economy. But the uncertainty goes both ways: it is just as conceivable that the US president will do a U-turn again – we have seen that often enough. Let us remember, for example, the reduction in tariffs on China, albeit only for 90 days, which led to a significant rally in the dollar."

It added; “So it is not the case that, alongside the USD doomsday scenarios, USD-positive scenarios are completely unthinkable.”

Earlier, the UK PMI services-sector index was revised higher to 50.9 from the flash reading of 50.2 and above the April reading of 49.0 which suggested limited expansion in the economy.

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TAGS: Pound Dollar Forecasts