Pound price climbs to $1.285 as weaker dollar offsets UK housing
GBP/USD rises on weaker dollar and BoE rate cut expectations
The British pound advanced to $1.285 on Thursday, extending its three-day rally against the U.S. dollar as global markets reacted to deepening U.S.-China trade tensions. The pair’s gains were supported primarily by broad-based dollar weakness, even as domestic UK indicators and monetary policy expectations weighed on sentiment.
The latest round of tariff escalations has rattled investors, with U.S. President Donald Trump hiking tariffs on Chinese goods to 125% shortly after Beijing imposed an 84% duty on U.S. imports. The European Union followed suit, approving duties on $23.2 billion worth of U.S. goods. These moves fueled fears of a global trade war, amplifying recession concerns and strengthening the case for further monetary easing across major economies. In the UK, Bank of England Deputy Governor Clare Lombardelli warned the trade war could dampen growth, although the inflation outlook remains uncertain. Markets now expect the BoE to cut rates by 50 basis points in May, with up to four cuts priced in for 2025—one more than previously expected.
GBP/USD price dynamics (March 2025 - April 2025) Source: TradingView.
BoE policy shift, housing data add to volatility
The dovish shift comes amid signs of weakening domestic demand. The RICS Housing Price Balance slowed sharply in March, rising only 2% compared to 11% in February and 20% in January, missing the forecast of 8%. This decline in housing momentum suggests that economic softness may be spreading across sectors. Meanwhile, the pound's upward momentum has been tempered by anticipation of BoE Deputy Governor Sarah Breeden’s upcoming remarks on the UK’s financial stability and growth outlook.
Adding to the backdrop, the latest Federal Open Market Committee minutes suggested that the Federal Reserve faces “difficult tradeoffs” as it confronts high inflation and slower growth. Traders expect further easing in U.S. rates, contributing to dollar softness and helping support currencies like the pound in the near term.
While the pound has recovered recent losses, further gains may depend on how BoE officials respond to global shocks and domestic weakness. The 1.2850 level remains a short-term pivot, with resistance at 1.3000 and support near 1.2610. Markets will closely watch upcoming speeches and Friday’s UK GDP release for fresh guidance.
In earlier sessions, we noted that GBP/USD's recovery could continue if global risk sentiment softens the dollar and BoE dovishness strengthens. That scenario is unfolding, but the pair remains sensitive to economic data surprises.
