Pound To USD Forecast: Is Now A Good Time To Buy US Dollars With Pounds?

GBPUSD Forecast Highlights

• Sterling rallies back to 1.300, caused by a weakening dollar and oversold technicals
• Technical resistance noted at 1.300, which may hamper its recovery rally
• Further GBP bullish macro catalysts required to sustain a further advancement

How has the Pound performed against the Dollar recently?

A sea change is taking place across the global financial market. This turbulence has lifted GBPUSD more than expected this year.

What is exactly unsettling investors? Long story short, the newly-installed White House administration is steadily undermining prior investor assumptions and geopolitical norms. A case in point is Trump’s threat to leave NATO. This is a serious and far-reaching issue. Taking account of those impending tariffs, no wonder investors are becoming nervous. The USD, consequently, took a hit.

GBP was mired in a downtrend in January until these newly-emerged macro issues precipitated a capital shift out of dollar assets. GBPUSD broke the downtrend decisively in mid-February. This rebound quickly pierced the resistance at 1.280 and the rate hit a high of US$1.3000 to one Pound Sterling (see below).

If anything, the sudden weakness in USD re-affirmed the principle that financial markets are always unpredictable. A crowded trade, like Long Nasdaq and USD, runs the risk of being whipsawed violently. Macro factors have a habit of confounding investors.

What, then, will happen to GBPUSD now that its oversold technicals have unwound? The first thing to note is that 1.300 has again checked its advance.

Having gained 800bps over six short weeks, chances to a short-term reversal are a distinct possibility. The near-term support is noted at 1.2800. The second item to note is that more unpredictable policies are continuing to emanate from the US White House.

All these will cause further gyrations in the GBPUSD.

Is it a good time to buy US Dollars with pounds?

Given that Sterling has strengthened sharply the Dollar, should we sell GBP to buy USD before this recently acquired strength evaporate?

If you need dollars now (or in the short term), sell some Pound Sterling now buy dollars may be a sensible thing. The rate is still quite close to 1.300 and a reaction from here may occur. Note further 1.300 is the highest rate since early November.

However, you may choose to wait to buy Dollars above 1.300. This breakout at 1.300 is possible given the still-intact uptrend. But the risk is that the breakout may not happen, or it materialises after a long delay. Depending on your needs, 1.295-1.300 is a good rate to buy at least some Dollars.

Will the pound get stronger against the USD in the second quarter of 2025?

At the start of the year, investor sentiment on USD assets (Dollar, US Stocks) was uber bullish. Nine out of the top ten largest stocks in the world, with a minimum of $1 trillion in market cap, resided in the US. “The US economy“, predicted Goldman Sachs’ last November “is in a good place.”

But a string of governance issues since has dented this optimism somewhat. Fears of a recession have increased dramatically. The former Federal vice-chair Alan Blinder recently warned in the WSJ (24 March) with a piece entitled: “Trump plays recession Roulette with the American Economy.”

In late March, The Conference Board, a US nonprofit Think Tank, noted that:

Consumers’ expectations of future business conditions turned more pessimistic. That was the component that weighed down most heavily on the Index in February. Manufacturing new orders, which improved in January, retreated and were the second largest negative contributor to the Index’s monthly decline.

Its Leading Economic Index (LEI) affirms the downtrend in economic activities (see below). It is not a coincident, then, the US S&P 500 blue-chip index slumped into a correction territory just days after it peaked at record highs in February. Many high-flying stocks like Tesla (TSLA:US) have plummeted.

Despite all these macroeconomic concerns, more trade tariffs are still coming. The next important date on the diary is April 2, the day auto tariffs will come into place. Obviously, investors are hoping that these trade barriers will be watered down – or at least, phased out long into the future. At the moment, negotiations are still taking place. There is hope.

Tariffs aside, geopolitical concerns are too weighing on USD assets.

Taken together, outlook uncertainty seems to have rocketed in the first quarter. In this context, GBPUSD’s next move is hard to say for certain. What if the US administration changes direction with more dovish policies? US assets will certainly rally hard, since they are technically oversold now. GBPUSD is likely to correct (USD stronger). Ergo, price variation of GBPUSD has widened in recent weeks and prices may bounce around the recent price range.

Source: The Conference Board (March 25)

What is the GBPUSD forecast in weeks, months, and years?

The turnaround in GBPUSD’s weak trend has been swift. Price first rebounded hesitantly to 1.250 before making a quick run to 1.300.

Because this rebound was not sustained by a marked improvement in UK’s macro outlook, many brokers have not upgraded GBPUSD price forecast above 1.300. For example, the bulk of the price predications lies at 1.260-1.280 (see below).

If we look three months ahead, the range is still below 1.300. Therefore, traders are not convinced that GBPUSD will stay above 1.300 unless new macro factors emerge to sustain the rally.

Source: fxstreet.com (Jan 2025)