GBP/USD Price Forecast: Pound Sterling Climbs after Trump Address

Modified: Wednesday, 25 February 2026 17:01 BST - Written by Tim Boyer

STORY LINK GBP/USD Price Forecast: Pound Sterling Climbs after Trump Address

The Pound to US Dollar (GBP/USD) exchange rate rose on Wednesday as the US Dollar weakened following market reaction to President Donald Trump’s State of the Union address.

At the time of writing, GBP/USD was trading near $1.3517, representing a gain of roughly 0.2% compared with the start of the session.

The US Dollar came under pressure midweek as investors assessed the implications of Donald Trump’s State of the Union address.

During what became the longest speech of its kind, Trump defended his administration’s economic record and strongly promoted his trade policies. He criticised the Supreme Court’s decision to overturn his earlier IEEPA tariff framework while arguing that the newly introduced global tariff structure could ultimately prove more effective.

The president also floated the idea that tariff revenues might one day offset income taxes, adding another layer of uncertainty for markets already grappling with shifting US trade policy.

Geopolitical concerns also lingered after Trump again referenced the possibility of military action against Iran, although he emphasised a diplomatic solution remained his preferred outcome.

The Pound traded with relative stability as investors adjusted their expectations for the Bank of England’s upcoming policy decision.

Remarks from Governor Andrew Bailey a day earlier prompted markets to dial back certainty surrounding a March interest rate cut after he suggested policymakers had yet to reach a firm conclusion.

While traders still broadly anticipate monetary easing in the near term, the perception that next month’s decision is not guaranteed helped lend Sterling some underlying support.

Short-Term GBP/USD Forecast: UK Politics and US Inflation Data in Focus

Domestic political developments could inject volatility into the Pound later in the week as the Greater Manchester by-election approaches.

A disappointing outcome for Labour may reignite concerns over Prime Minister Keir Starmer’s leadership prospects, potentially weighing on investor confidence in UK assets.

At the same time, the US Dollar’s direction may hinge on the release of the latest US producer price index figures. Evidence of easing pipeline inflation could reinforce expectations that the Federal Reserve will continue loosening monetary policy, which may limit demand for the ‘Greenback’.

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TAGS: Pound Dollar Forecasts