GBP/USD Forecast: Pound Sterling Rises as Peace Hopes Weigh on Dollar

Modified: Tuesday, 31 March 2026 21:01 BST - Written by Tim Boyer

STORY LINK GBP/USD Forecast: Pound Sterling Rises as Peace Hopes Weigh on Dollar

The Pound to US Dollar (GBP/USD) exchange rate moved higher on Tuesday, buoyed by renewed optimism that tensions in the Middle East could ease.

At the time of writing, GBP/USD was trading close to $1.3239, up around 0.4% compared to the day’s opening levels.

The US Dollar came under pressure as markets responded to mounting speculation that the US and Iran may be edging toward a diplomatic resolution.

Reports suggested that US President Donald Trump may be willing to conclude the conflict without first securing full control over the Strait of Hormuz, while US Defence Secretary Pete Hegseth indicated that the coming days could be decisive and that the US is leaving the door open for negotiations.

Further weighing on the US Dollar was the latest Job Openings and Labor Turnover Survey, which showed a sharper than expected drop in vacancies during February, despite an upward revision to January’s figures.

Softer labour market signals have fuelled expectations that the Federal Reserve may take a more cautious approach to tightening policy as employment conditions cool.

The Pound strengthened against the US Dollar but struggled to establish a clear trend elsewhere following the release of the UK’s latest GDP data.

Figures from the Office for National Statistics confirmed that the economy expanded by just 0.1% in the final quarter of 2025, matching earlier estimates but highlighting the fragility of the UK’s growth outlook.

The subdued performance suggests the economy entered 2026 with limited momentum, leaving it exposed to external pressures such as rising energy costs and ongoing geopolitical tensions.

Short-Term GBP/USD Forecast: US Data in Focus

The Pound to US Dollar exchange rate may face fresh volatility with the release of key US economic data.

Retail sales are expected to show a rebound in February, while manufacturing PMI figures are forecast to indicate steady activity in the sector.

Developments in the Middle East are likely to remain the dominant influence, with sentiment hinging on whether geopolitical tensions continue to ease or escalate as the week progresses.

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TAGS: Pound Dollar Forecasts