GBP/USD Forecast: Dollar Drifts, Pound Underpinned by British Services PMI

June 5, 2025 - Written by Tim Boyer

STORY LINK GBP/USD Forecast: Dollar Drifts, Pound Underpinned by British Services PMI

The Pound to Dollar exchange rate (GBP/USD) held strong on Wednesday after the UK’s final services PMI was revised higher for May.

At the time of writing, GBP/USD was trading at $1.3533, up roughly 0.2% since the beginning of the European session.

The Pound (GBP) found a degree of stability midweek, following a better-than-expected reading from the UK’s services sector.

Final data for May’s services PMI showed a return to growth, clocking in at 50.9 – a notable improvement from April’s 49 and slightly higher than the initial flash estimate of 50.2. Coupled with an earlier revision to the UK’s manufacturing PMI, the figures suggest the economy narrowly sidestepped another month of contraction.

Adding to the mix of supportive headlines, Chancellor Rachel Reeves unveiled a £15bn investment package aimed at upgrading the country’s transport infrastructure. Meanwhile, news that British steel and aluminium exports will be spared from the latest wave of US tariffs provided a further lift to sentiment.

That said, broader market caution acted as a cap on gains for the Pound, tempering any more substantial upward momentum.

The US Dollar (USD) struggled to find clear direction on Wednesday, as global investors navigated an unsettled market backdrop shaped by renewed trade tensions.


While equity markets edged higher – often a signal of growing risk appetite – underlying caution lingered, particularly in light of fresh tariff measures announced by President Donald Trump. The conflicting signals left traders uncertain about the broader mood, which in turn kept the safe-haven US Dollar on a subdued path.

With sentiment swinging between optimism and unease, the ‘Greenback’ drifted through the session, lacking the momentum typically fuelled by a clear risk-on or risk-off narrative.

Looking ahead, the Pound may find itself muted through the latter half of the week, with the UK economic calendar offering little in the way of fresh data. In the absence of key releases, investors could turn their attention to political or trade-related developments. Any signs of progress on a US-UK trade agreement, for instance, may offer some tailwinds for Sterling.

Across the Atlantic, the US Dollar could react to the latest initial jobless claims on Thursday. Markets are anticipating a modest decline in new unemployment filings for the week starting 31 May. However, should the figures print higher than expected once again, the ‘Greenback’ may come under renewed pressure.

That said, significant movement is more likely to be reserved for Friday, when the closely watched non-farm payrolls report lands. Forecasts point to a slowdown in US job creation, with May’s figure expected to dip to 130,000 from April’s 177,000. Signs of a softening labour market could dampen USD demand, especially if wage growth also falters.

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TAGS: Pound Dollar Forecasts