Pound to Dollar Forecast: GBP Reclaims 1.35 as Tariff Chaos Hits USD

Published: Tuesday, 24 February 2026 10:30 BST - Written by Frank Davies

STORY LINK Pound to Dollar Forecast: GBP Reclaims 1.35 as Tariff Chaos Hits USD

The Pound to Dollar exchange rate (GBP/USD) has regained the 1.3500 level as renewed US trade policy uncertainty weighs on the dollar following a Supreme Court ruling against President Trump’s tariff regime.

After initial volatility triggered by weaker US GDP data and confusion over the administration’s next steps on tariffs, the greenback has struggled to maintain momentum, allowing Sterling to recover from recent lows despite lingering UK fundamental concerns.

GBP/USD Forecasts: Regain 1.35

The dollar lost ground in US trading on Friday with initial disappointment over the latest GDP data compounded by the US Supreme Court ruling on US tariffs.

Danske Bank commented; “The knee-jerk reaction following the US Supreme Court ruling was for the unusual combination of higher rates and weaker USD. The changes were however relatively modest.”

The US currency also lost ground on Monday with the Pound to Dollar (GBP/USD) exchange rate trading just above the 1.3500 level. The first short-term resistance area is around 1.3550.

According to UoB; “While it is currently unclear whether GBP can break clearly above this level, the major resistance at 1.3605 is unlikely to come under threat. It added; “Support is at 1.3480; a breach of 1.3460 would mean that the current upward pressure has eased.”

ING commented; “The fact that the US did not launch a military strike on Iran this weekend is probably one factor behind the dollar selling, but trade uncertainty and what it means for the US economy is another.

Danske Bank also noted the high degree of uncertainty; “Focus at the start of the week will be on the union speech by President Trump tomorrow which will be particularly interesting given the latest trade policy developments as well as the geopolitical developments surrounding Iran.”

On Friday, the US Supreme Court ruled that the Administration’s tariffs under emergency legislation (IEEPA) were unconstitutional and the policy would have to be scrapped.

Almost immediately, President Trump announced the 10% tariff rate under Section 122 and then raised this to 15%.

There is a high degree of uncertainty whether there will be refunds to importers who have been paying the tariffs. There are also important uncertainties whether these new tariffs will apply to the bilateral trade deal such as the US-UK deal.

Any overall decline in tariff levels could underpin the global economy. OCBC currency strategist Sim Moh Siong commented; "It weakens the dollar in the sense that it potentially benefits non-U.S. growth. There will, however, be concerns that the uncertainty will trigger another dip in UK business confidence.

As far as the US economy is concerned, MUFG noted; “The reduction in the overall average effective tariff rate could be viewed as a positive for the US economy as well. However, the increased level of trade policy uncertainty, at least initially, could work to offset that and hence we view the Supreme Court ruling as being mildly dollar negative.”

The bank also discussed other potential implications; “We also need to monitor closely the Trump administration’s views on the US dollar. We have assumed that ultimately some of the key members of the Trump administration want a weaker US dollar and there is a risk that the administration lean on this more explicitly given the set-back on its reciprocal tariff regime.”

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TAGS: Pound Dollar Forecasts