Created on March 13, 2025

• The GBP/USD pair’s upward trajectory has come to a relative halt, having been on the cusp of the psychological resistance at 1.3000, with gains reaching a peak of 1.2988, the highest level for the pair in four months.
• According to trading, the GBP/USD exchange rate declined against the US dollar after US inflation fell below expectations.
• However, the weakness is expected to be limited, and the upward trend will remain strong.

The US Dollar Is Affected by Weaker Inflation Figures

According to Forex market trading, the US dollar rose in tandem with news of US inflation for February declining to 0.2% month-on-month from 0.5%, surpassing expectations of 0.3%. Officially announced, the annual rate fell to 3.1% from 3.3%, also lower than the consensus expectations of 3.2%.

Overall, the Forex market guide suggests that weak US inflation would increase the chances of the Federal Reserve cutting interest rates further, which would negatively impact the US dollar. However, the recent period has witnessed sharp volatility for the US dollar and the global currency market in general, so we are not surprised by the unexpected rise in the dollar.

The decline in inflation will alleviate concerns about the US economy heading towards a bout of stagflation, which is, to some extent, supportive of the currency. Furthermore, the US Dollar Index performance had declined during 2025 amid signs of a slowing US economy and expectations of rising inflation with increased import costs due to tariffs. Obviously, high inflation and declining growth create a stagflation environment that rarely supports currencies.

However, the US dollar is also benefiting from the sense that concerns about tariffs are fully understood, and that headlines and threats from the White House are losing their grip on the currency. However, the decline in the GBP/USD pair remains shallow, and the trend of least resistance remains upward, with the psychological resistance level of 1.30 emerging.

Trading Tips:

The GBP/USD upward trend is at an important stage for continuation or exposure to profit-taking selloffs, so caution is advised.

Will the GBP/USD reach the 1.30 high?

According to Forex market experts, the situation for the GBP/USD pair will become more difficult at this important 1.30 level. The GBP/USD exchange rate is primarily dependent on the EUR/GBP and EUR/USD exchange rates these days (the EUR/GBP pair is experiencing a slight increase simply because its rise has been slower than the EUR/USD pair’s). However, the slowdown in UK economic growth, caused by fiscal measures, is likely to be sufficient to encourage hedging of any long-term exposure to the British pound, as the GBP/USD exchange rate approaches or breaks the 1.30 level.

Technical Analysis for the GBP/USD pair today:

According to daily chart trading above, the general trend for the GBP/USD currency pair remains upward. As we mentioned before, the psychological resistance of 1.3000 will remain the most important for the strength of the bulls’ control of the trend, and at the same time, it will be sufficient to push technical indicators towards strong overbought levels, led by the Relative Strength Index and the MACD indicator. In contrast, there will be no exit from the current upward channel without moving towards and below the support level of 1.2740. furthermore, the GBP/USD performance will remain dependent on investor sentiment towards risk appetite and the reaction to signals from global central bank officials. So far, the GBP has avoided the reaction from US tariffs.

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March 13, 2025 – Written by Ben Hughes

STORY LINK Euro to Dollar Forecast: EUR/USD Drops as US-EU Trade War Escalates

Risk markets are fading lower again and the Euro (EUR) is retracing some of its recent rally against the US Dollar (USD). This comes despite better-than-expected inflation readings in the US. The trade war has escalated in the last 24 hours and the EU is in Trump’s sights.

There was a peculiar reaction to Wednesday’s cooler CPI readings in the US. After a strong rally, stocks faded back into the red, while the US dollar reversed higher. Not only that, the odds of rate cut in May from the Fed fell from 40% to 30%.

This was not the expected reaction – fears of inflation have been weighing on risk markets so the lower-than-expected readings should have given them a significant boost. There were several possible reasons for the reaction.

Firstly, the February data may be the calm beofre the storm. Tariffs are expected to significantly increases inflation over the coming months as prices of imports increase and are passed on to consumers. This has only just started happening.

Secondly, President Trump took credit for the better inflation readings with a post on Truth Social stating,

“The price of eggs have come down, interest rates have come down, gasoline prices have come down—It’s all coming down!”

The problem – at least for markets – is that Trump’s policies seem to be tackling inflation, at least in the short-term. This encourages more of the same policies and Trump has taken to social media to air his thoughts.

“The U.S. doesn’t have Free Trade. We have “Stupid Trade.” The Entire World is RIPPING US OFF!!!,” he posted on Thursday.

Indeed, the last 24 hours have been awash with trade war threats., with the EU now firmly in the crosshairs.

“The European Union, one of the most hostile and abusive taxing and tariffing authorities in the World, which was formed for the sole purpose of taking advantage of the United States, has just put a nasty 50% Tariff on Whisky. If this Tariff is not removed immediately, the U.S. will shortly place a 200% Tariff on all WINES, CHAMPAGNES, & ALCOHOLIC PRODUCTS COMING OUT OF FRANCE AND OTHER E.U. REPRESENTED COUNTRIES.”

This has hit the euro and EURUSD is down 0.4% at 1.085 having reached a peak of 1.095 earlier this week. Tariffs threaten the still-fragile EU economy and could lead to further aggressive cuts from the ECB in a bid to support affected businesses.

The Bank of Canada has taken a similar approach and lowered rates by 25bps yet again this week, taking the rate to 2.75%. This marks 225bps of cuts since June 2024, when rates peaked at 5%. The statement blamed US-Canada trade tensions as a potential drag on growth and a driver of inflation. As ING noted on Wednesday,

“The Bank continues to acknowledge “more than usual uncertainty” due to trade tariffs and has a sense that this uncertainty is “restraining consumers’ spending intentions and businesses’ plans to hire and invest.” After all, 76% of Canadian exports go to the US, equivalent to 20% of Canadian GDP – so even a modest drop in exports could risk a recession.”

Cutting rates will help the economy but they are only now around neutral rates – if stimulus is required to avoid a recession they may have to go much lower and this prospect should keep the Canadian Dollar and euro suppressed and the US dollar bid. So far, there are no signs of inflation making a comeback but both the BoC and ECB will have a challenging year trying to balance out growth and inflation with a messy trade war constantly evolving in the background.

Euro to Dollar Exchange Rate Technicals: Short-Term

According to FX strategists at Scotiabank, the short-term outlook remains neutral.

“EURUSD continues to consolidate. Spot losses are extending for a second day and testing support in the upper 1.08s but the broader, technical undertone remains constructive and dips to the low/mid 1.08 area should remain supported. Key short-term support is 1.0805. Resistance is 1.0950 and 1.10.”

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March 13, 2025 – Written by Tim Boyer

STORY LINK GBP/USD Forecast: Pound Sterling Unable to Break 1.30 – Where Next?

The Pound to Dollar exchange rate (GBP/USD) peaked at 4-month highs just below 1.2990 on Wednesday before a retreat to near 1.2950.

Huge global influences of trade wars and the Ukraine situation will remain crucial for markets with stock market trends also watched very closely.

Markets will also have to factor in the possibility of a US government shutdown given that Senate Democrats are threatening to block the Republican budget resolution.

According to ING; “we retain a bearish bias on GBP/USD, although near-term noise linked to the US macro outlook might still bring the pair temporarily above 1.3000.”

Domestic factors will come into greater focus, especially if there is greater evidence of vulnerability.

The RICS housing index dipped to 11 for February from a revised 21 previously, below consensus forecasts of 20 and a 4-month low.

The indicator of new buyer enquiries also slipped to the lowest level since November 2023.

RICS Chief Economist Simon Rubinson commented; “The UK housing market appears to be losing some momentum as the expiry of the temporary increase in stamp duty thresholds approaches. Some concerns are also being expressed by respondents about the re-emergence of inflationary pressures and the more uncertain geopolitical environment.”

He was still broadly optimistic over the outlook; “That said, looking beyond the next few months, sales activity is seen as likely to resume an upward trend with prices also moving higher.”

The latest UK GDP data will be released on Friday. Consensus forecasts are for 0.1% growth for January after a 0.4% increase previously.

Any monthly contraction in GDP for the month would trigger fresh selling pressure on the Pound.

Monetary and fiscal policy will come into greater focus with the latest Bank of England policy decision on March 20th and budget on March 26th.

The government is likely to announce medium-term departmental spending cuts given the erosion of fiscal headroom.

ING commented; “We still look with some concern at the upcoming 26 March Budget event in the UK, which runs the risk of unnerving a gilt market already hit by EU-bond spillover. We see downside risks for sterling ahead of the risk event.”

Globally, there has been some relief for equity markets with US markets able to secure tentative gains and the FTSE 100 index opening higher on Thursday.

Overall sentiment remains fragile, especially with unease over an escalation in trade wars.

If US markets decline and European markets are resilient, the dollar will tend to weaken. If all markets come under pressure, the US currency could benefit.

According to ING; “the key is whether more equity declines are a US-only matter or followed by European stocks. Futures point to the latter today, so the dollar may not face much idiosyncratic pressure.”

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