GBP/USD Forecast: Pound Sterling Rebounds but US Dollar Supported by Strong Jobs

Modified: Monday, 6 April 2026 21:31 BST - Written by David Woodsmith

STORY LINK GBP/USD Forecast: Pound Sterling Rebounds but US Dollar Supported by Strong Jobs

The Pound US Dollar (GBP/USD) exchange rate dropped sharply last week after comments from US President Donald Trump reignited market concerns over the conflict in the Middle East.

At the time of writing, GBP/USD was trading at 1.32367, up 0.38% on the day as markets stabilised following last week’s volatility.

The US Dollar rallied sharply late last week, rebounding as investor sentiment soured following fresh comments from President Donald Trump regarding the Iran conflict.

Earlier optimism had stemmed from Trump’s suggestion that the war could conclude within weeks, alongside indications that Iran might be open to a ceasefire. This had led markets to anticipate a more conciliatory tone in his televised address.

However, while Trump maintained that the conflict could be resolved in the near term, he also warned that the US would hit Iran extremely hard in the meantime, reiterating threats against key infrastructure such as power facilities.

The more aggressive rhetoric unsettled investors, prompting a shift towards safer assets. As a result, demand for the US Dollar strengthened.

The move was reinforced by Friday’s stronger than expected US non farm payrolls report. Data from the Bureau of Labor Statistics showed employment rose by 178000 in March, a sharp rebound from February’s revised 133000 decline and well above expectations for a 60000 increase.

The data helped to ease concerns over labour market weakness and reduced expectations for near term Federal Reserve rate cuts, lending further support to the US Dollar.

The Pound came under pressure amid the souring market mood, with Sterling slipping as risk appetite deteriorated.

Alongside the broader risk off tone, a rise in UK government bond yields also acted as a drag on the currency. As expectations for de escalation in the Middle East diminished, concerns over a sustained inflationary shock drove borrowing costs higher.

This increase in yields raised fresh questions about the UK’s economic outlook, particularly regarding the pressure on public finances, adding to downside pressure on Sterling.

Short-Term GBP/USD Forecast: Geopolitics and Fed Expectations in Focus

Developments in the Middle East are set to remain a major influence on GBP/USD.

Persisting geopolitical tensions could sustain demand for the US Dollar, while any renewed signs of de escalation may dampen appetite for the currency and offer some support to the Pound.

At the same time, the stronger than expected payrolls data may continue to underpin the US Dollar in the near term, as markets reassess the likelihood and timing of Federal Reserve interest rate cuts.

With limited UK data in the immediate term, Sterling may remain primarily driven by external factors and broader market sentiment.

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TAGS: Pound Dollar Forecasts