GBP/USD Price Forecast: Pound to Dollar Slides to 7-Week Lows at 1.3320 as U.S. Data and Trump Tariffs Crush Sterling

GBP/USD Slumps to 7-Week Lows as U.S. Data Lifts Dollar

The GBP/USD pair closed the week near 1.3320, marking a sharp fall to seven-week lows after a string of stronger-than-expected U.S. economic releases reinforced the dollar’s momentum. U.S. GDP surged 3.8% against the 3.3% forecast, while jobless claims dropped to 218K versus the 232K estimate, painting a picture of resilience that gave the greenback new fuel. Durable goods orders also flipped from -2.8% to +2.9%, adding another bullish layer to dollar positioning. These moves forced markets to trim expectations for aggressive Federal Reserve easing, with traders now pricing slower rate cuts despite October’s high probability. Federal Reserve Chair Jerome Powell’s cautious tone further underpinned this stance.

UK Economic Weakness Deepens Pound Pressure

Sterling’s decline was magnified by domestic weakness. UK composite PMI for September slipped to 51.0, down from 53.5 in August, signaling slowing economic activity. The softness in services, which remain the backbone of UK growth, highlights fragility in demand as political uncertainty lingers ahead of fiscal adjustments later this year. Demand for gilts also weakened, with yields retreating amid speculation that fiscal tightening in the November budget could add further weight to the UK outlook. The GBP/USD slide accelerated after the PMI miss, cementing sterling’s underperformance against peers.

Tariff Risks on Pharmaceuticals Add a Fresh Layer of Volatility

A new geopolitical overhang emerged as President Donald Trump unveiled sweeping tariffs that will hit UK pharmaceutical exports to the U.S. with 100% duties starting October 1. Pharmaceuticals make up roughly 3.3% of total U.S. imports from Britain, and the sector’s exposure leaves sterling vulnerable to extended trade tensions. While the EU and Japan secured exemptions with capped tariffs at 15%, the UK failed to secure similar treatment despite striking one of the earliest deals with Trump. The GBP/USD reaction was immediate, with the pound dropping 0.5% to close at 1.3402 against the dollar, erasing short-lived recoveries during the week.

Technical Outlook: Key Support and Resistance Levels for GBP/USD

Price action shows GBP/USD attempting to hold above the 1.3340 demand zone, but repeated failures to sustain momentum keep the bias tilted lower. The pair remains well below major moving averages, with the 200-day MA positioned near 1.3125 acting as a potential magnet for sellers if momentum persists. Minor rebounds have pushed cable back toward 1.3400, yet sellers continue to dominate, particularly as the RSI and MACD trend confirm bearish momentum. A decisive break below 1.3322 would extend the fall toward 1.3140, while recovery attempts face resistance at 1.3480–1.3500 where multiple moving averages converge.

Upcoming Catalysts: NFP, UK GDP, and Central Bank Signals

The week ahead is stacked with catalysts that could determine whether GBP/USD stabilizes or extends its slide. UK GDP data on Tuesday will provide a direct read on the economy’s momentum, while the U.S. JOLTS job openings and ADP employment change midweek will set the stage for Friday’s Non-Farm Payrolls. Consensus expects U.S. payrolls to rise by 51K with wage growth at 0.3% month-over-month. Any beat here could add renewed strength to the dollar, pressuring GBP/USD further toward the 1.31 handle. On the policy side, traders will closely monitor Bank of England speakers for any dovish hints and Fed officials for timing of cuts, while U.S. tariff rhetoric remains a wild card.

Market Sentiment: Dollar Dominance Versus Sterling Vulnerability

The broader FX sentiment favors the U.S. dollar as solid data combines with cautious Fed messaging, while sterling remains capped by slowing growth and tariff uncertainty. The dollar index (DXY) staged a rebound after dipping to 2025 lows, finishing the week at 98.18. GBP/USD risks remain skewed to the downside unless the UK surprises with stronger GDP or the U.S. labor market shows meaningful weakness. With traders already factoring in fiscal risks ahead of the November UK budget, sterling’s recovery attempts could be shallow. Near-term outlook leans bearish, with key levels to watch at 1.3320 on the downside and 1.3480–1.3500 on the upside.

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