Pound to Dollar Forecast: USD, Stocks Rally Despite Trump Tariff Threats

July 8, 2025 - Written by Ben Hughes

STORY LINK Pound to Dollar Forecast: USD, Stocks Rally Despite Trump Tariff Threats

The Pound US Dollar exchange rate held steady as a risk-on market mood underpinned GBP/USD on Tuesday.

At the time of writing, GBP/USD was trading at approximately $1.3612, virtually unchanged from the start of Tuesday’s session.

The US Dollar (USD) weakened against most major currencies on Tuesday after President Donald Trump announced an overnight extension to the deadline for implementing global tariffs, pushing it from 9 July to 1 August.

Rather than sparking concern, the announcement was met with a wave of optimism during the European session, fuelling a broad risk-on rally.

Investors appeared largely unconcerned by the delay and prospects of additional tariffs.

The market’s muted reaction reflected a growing sense of fatigue toward tariff threats, which have become a recurring theme of Trump’s trade strategy but are often softened or reversed.

As Wind Shift Capital’s Bill Blain put it: ‘A year ago, the idea that a sovereign nation would blithely impose crippling global tariffs on its long-standing friends, allies, and competitors, and expect them to bend over and say, “Thank you sir, may I have some more”, would have been dismissed as the mad haverings of a dystopian crackpot. Today, it’s happening, and no one bats an eyelid. That’s because markets have concluded that last night’s tariffs are “just another TACO (Trump Always Chickens Out) ploy.”’


As such, the US Dollar lost ground as investors sought out riskier assets, shrugging off the latest tariff headlines.

The Pound (GBP) lacked clear momentum on Tuesday, with the absence of UK economic data leaving it to drift in response to global risk appetite.

As market sentiment improved, traders turned towards riskier assets, which weighed on Sterling against its risk-sensitive counterparts.

Although the Pound has increasingly shown risk-sensitive traits, it failed to attract the same level of demand as its more volatile counterparts in the buoyant trading conditions.

With no domestic catalysts to steer direction, Sterling traded in a narrow range, influenced more by shifting investor mood than by any economic developments.

Looking ahead to Wednesday’s European session, movement in the GBP/USD exchange rate is likely to be shaped by the release of the latest minutes from the Federal Reserve’s FOMC meeting.

If the minutes reinforce expectations for a cautious approach to future US interest rate cuts, the US Dollar may strengthen later in the day.


Meanwhile, the UK’s economic calendar remains quiet, offering little domestic impetus for Sterling.

In the absence of fresh data, GBP is expected to remain directionless, with broader market sentiment continuing to guide its path.

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TAGS: Pound Dollar Forecasts