May 28, 2025 – Written by David Woodsmith

STORY LINK Pound to US Dollar Forecast: The “Trend for GBPUSD is Bullish”

Contrasting confidence surveys helped trigger a dollar rebound on Tuesday with European currencies also on the defensive, but investment banks are not convinced there will be a sustained recovery.

After hitting 3-year highs near 1.3600 late last week, the Pound to Dollar (GBP/USD) exchange rate retreated to below 1.3500 to trade around 1.3480 on Wednesday.

Scotiabank remains bullish on GBP/USD, although the dip below 1.3500 will cause some concern.

According to Chief FX strategist Shaun Osborne; “The trend for GBPUSD is bullish, given the sequence of higher lows and higher highs, as well as the recent push to fresh multiyear highs.

He added; “We look to near-term support at 1.35 and near-term resistance at 1.36.”

The latest US data recorded a strong rebound in consumer confidence for May with a jump to 98.0 from 85.7 previously and well above consensus forecasts of 87.1.

The expectations Index surged 17.4 points to 72.8, but remained below the threshold of 80, which typically signals a recession ahead.

According to Stephanie Guichard, Senior Economist, Global Indicators at The Conference Board. “The rebound was already visible before the May 12 US-China trade deal but gained momentum afterwards.”

She noted that confidence in the stock market rebounded strongly and added; “However, while consumers were more positive about current business conditions than last month, their appraisal of current job availability weakened for the fifth consecutive month.”

US durable goods orders declined 6.3% for April, but markets expected a deeper decline of 7.6%.

US data will continue to be monitored closely.

According to ING more good news will be required to reverse underlying dollar losses; “Our view is that the balance of risks remains skewed to the downside for the dollar due to deficit concerns and trade uncertainty, unless US data comes in convincingly stronger than expected.”

As far as the UK is concerned, the CBI retail sales index dipped to -27 for May from -8 in April and retailers expect a further slide to -37 for June while confidence dipped at the fastest rate for five years.

CBI lead Economist Ben Jones commented; “This was a fairly downbeat survey and highlights some of the challenges facing the retail and wider distribution sector. In contrast to other recent retail data, this survey suggests parts of the sector are still struggling with fragile consumer demand.”

Scotiabank noted little change in Bank of England pricing which may cushion the Pound; “rate expectations remain steady, with markets pricing a minimal chance of a 25bpt cut in June and 39bpts of easing by December.”

Markets continued to debate the wider dollar outlook amid the on-going focus on trade following President Trump’s quick reversal of last Friday’s threat to impose a 50% tariff on EU goods from June 1st.

Commerzbank FX analyst Michael Pfister expects further volatility; “One thing should be clear after Friday’s announcement: the brief respite from tariffs that we enjoyed was only temporary. We are likely to face more turbulent days and weeks ahead precisely because the 90-day suspension of higher reciprocal tariffs is coming to an end.”

Danske Bank is also bearish on the dollar; “We remain medium-term USD bearish and expect renewed downside pressure in the weeks ahead. Fiscal concerns, trade policy uncertainty, and a fragile global risk environment could continue to erode the greenback’s appeal.”

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TAGS: Pound Dollar Forecasts