Pound Sterling Steady after Reeves Growth Plan as Dollar Drifts Lower

Modified: Tuesday, 17 March 2026 20:01 BST - Written by David Woodsmith

STORY LINK Pound Sterling Steady after Reeves Growth Plan as Dollar Drifts Lower

The Pound to US Dollar (GBP/USD) exchange rate ticked higher on Tuesday, supported by a generally constructive tone in global markets.

At the time of writing, GBP/USD was trading around $1.3334, slightly firmer than at the start of the session.

The US Dollar continued to edge down, extending its recent pullback as demand for safe-haven assets eased.

The ‘Greenback’ came under pressure at the start of the week as improving sentiment reduced its appeal, and this trend persisted into Tuesday’s European session.

This came despite lingering geopolitical tensions in the Middle East and a rebound in oil prices, with reports that Israel had eliminated a senior Iranian official doing little to significantly dent the cautious improvement in risk appetite.

At the same time, US Dollar investors appeared reluctant to take on fresh positions ahead of the Federal Reserve’s upcoming interest rate decision, further limiting movement in the currency.

The Pound traded within a tight range after Chancellor Rachel Reeves outlined the government’s strategy to boost economic growth.

Her proposals focused on expanding the use of artificial intelligence and strengthening economic ties with the European Union, developments which were broadly welcomed by investors. Given that the EU remains the UK’s largest trading partner, closer cooperation was seen as a potential tailwind for the economy.

However, any optimism was tempered by ongoing doubts over the government’s ability to deliver meaningful improvements in growth, particularly after previous initiatives had only a limited impact.

Short-Term GBP/USD Forecast: Fed Decision in Focus

The Federal Reserve’s latest policy announcement is likely to be the primary driver of movement in the Pound to US Dollar exchange rate.

Although interest rates are expected to remain unchanged, this meeting will be closely watched as it is the first since the recent surge in energy prices linked to the Middle East conflict.

Economists anticipate that the Fed may adopt a more hawkish tone, potentially signalling that rate cuts could be delayed or even hinting at the need for further tightening. Such guidance could lend renewed support to the US Dollar.

Meanwhile, trading in the Pound may remain somewhat subdued ahead of the Bank of England’s own policy decision later in the week.

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TAGS: Pound Dollar Forecasts