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David Woodsmith

STORY LINK GBP/USD Forecast: Pound Sterling Below 1.33 after UK Autumn Budget

The Pound to US Dollar (GBP/USD) exchange rate struggled for direction on Wednesday as investors assessed the UK’s Autumn Budget and awaited the Federal Reserve’s latest interest rate decision.

At the time of writing, GBP/USD was trading at approximately $1.3297, marginally below Wednesday’s opening levels.

The Pound (GBP) struggled to attract support after Chancellor John Healey delivered his first Autumn Budget, with the announcement offering few surprises capable of shifting expectations for the UK economy.

Healey outlined measures aimed at easing financial pressures on households and businesses, alongside funding for Prime Minister Andy Burnham’s regional devolution agenda.

However, the Chancellor adopted a relatively cautious approach to taxation and public spending, reflecting the constraints imposed by elevated borrowing costs and the government’s limited fiscal headroom.

The absence of major policy surprises initially left Sterling trading within a narrow range.

The Pound subsequently edged lower as investors turned their attention to updated economic forecasts accompanying the Budget.

Revised projections pointed to a sharper slowdown in UK economic growth during 2027 than previously anticipated.

The Office for Budget Responsibility (OBR) also warned that the country’s fiscal challenges had intensified since its previous assessment in March.

The weaker outlook raised questions about the government’s ability to support economic activity while maintaining control of public borrowing.

For Sterling, the concern is that slower growth could weaken tax revenues and place further pressure on the Treasury’s finances, potentially limiting the Bank of England’s room to pursue additional monetary tightening.

Nevertheless, the relatively measured nature of Healey’s Budget appeared to prevent a more pronounced sell-off in the Pound.

The US Dollar (USD), meanwhile, traded within a narrow range as investors awaited Wednesday evening’s Federal Reserve interest rate announcement.

Policymakers are widely expected to leave borrowing costs unchanged at 18:00 GMT, following September’s 25-basis-point increase, which marked the first US rate hike in three years.

With the decision largely anticipated, attention will focus on the accompanying policy statement and comments from Fed Chair Kevin Warsh.

Persistent US inflation has strengthened expectations that the central bank could maintain a relatively hawkish stance, even if policymakers decide against another immediate increase.

Any indication that officials remain concerned about underlying price pressures could revive expectations for a December rate hike, potentially providing renewed support for the Dollar.

Conversely, a more cautious assessment of the economic outlook could reduce expectations for further tightening and leave the US currency vulnerable to selling pressure.

Near-Term GBP/USD Forecast: US GDP and Fed Guidance Could Test $1.33

The Pound to US Dollar exchange rate could experience increased volatility as investors digest the Federal Reserve’s latest policy announcement and Thursday’s US economic growth figures.

Preliminary third-quarter GDP data are expected to show annualised growth accelerating from 2.2% to 3.2%, suggesting the American economy maintained considerable momentum through the summer.

A stronger-than-expected reading could reinforce expectations that the Federal Reserve has room to raise interest rates again, potentially lifting the Dollar.

Combined with hawkish guidance from Wednesday’s policy meeting, robust GDP figures could put additional pressure on GBP/USD.

The $1.3300 level remains an important near-term reference point, with a sustained move below this area potentially exposing the $1.3250 region.

However, disappointing US growth figures or a less hawkish message from the Fed could allow Sterling to recover towards $1.3350.

For the Pound, investors will continue assessing the implications of Wednesday’s Autumn Budget.

The reaction of UK government bond markets will be particularly important, with any renewed increase in gilt yields potentially signalling concerns about the outlook for public borrowing.

A stable bond market response could offer Sterling some reassurance, while further evidence that the UK’s growth prospects are deteriorating may limit the currency’s ability to recover.

With both the Federal Reserve’s policy outlook and the UK’s fiscal position under scrutiny, GBP/USD may remain sensitive to changes in interest rate expectations over the coming sessions.

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USD/JPY Forecasts Split: BNP Sees 163 as Crédit Agricole Targets 150

The Japanese Yen’s outlook divides banks as BNP sees US rates limiting gains, while Crédit Agricole expects a smaller US advantage to aid recovery.

The US Dollar to Yen exchange rate was trading at ¥157.73 on Wednesday, slightly lower after approaching 158 at Tuesday’s close.

For end-2027, BNP Paribas forecasts 163, while Crédit Agricole expects 150: two projections that place the Japanese currency on opposite sides of its current level.

BNP sees Japanese hikes falling short

BNP Paribas’s currency assessment is explicit: “The USD/JPY appreciation would continue but at a more moderate pace, with the BoJ still behind the curve despite its hikes.”

Its forecast puts Japan’s policy rate at 2% by end-2027, so its bearish yen view does not depend on the BoJ abandoning normalisation.

BNP’s economists write: “Higher inflation and production costs associated with the energy shock are expected to weigh on the economy’s overall performance. On the other hand, the latter is supported by fiscal policy and AI-related investment.”

Higher Japanese rates need not strengthen the yen if investors still regard US assets as more attractive.

BNP also sees pressures within Japan’s bond market: “Japan is facing long-term rates pressure, illustrated by historically high 10- and 30-year yields, probably fueled by the level of public debt and the pace of monetary adjustment.”

BNP expects resilient US growth and persistent inflation: “This apparent resilience to the uncertainty, tariff and energy shocks, together with above-trend productivity growth, masks K-shaped growth, driven by investment linked to AI-optimism and consumption by the wealthiest amid a wealth effect (historically high stock market valuations).”

“The labour market is showing clear signs of improvement that should bring the unemployment rate down toward 4.0%.”

“Given this shift in price and employment risks amid dynamic growth, the FOMC proceeded with a first rate hike at September’s meeting and we expect two further 25bp increases in December 2026 and January 2027, bringing the Fed Funds target range at 4.25% – 4.50%.”

BNP’s table keeps the upper end of that range at 4.50% throughout the rest of 2027, maintaining a substantial gap over Japanese policy rates even after further BoJ increases.

BNP expects the Euro and Pound Sterling to gain against the US Dollar over 2027, making the yen an exception to its broader view.

Crédit Agricole expects the US advantage to diminish

Crédit Agricole identifies “Legislative gridlock in DC and fading fiscal support in the US after the midterms” as one reason US outperformance could become harder to sustain.

It also envisages portfolio rebalancing after “Slowing US AI investment & AI stock market correction”, alongside softer US consumer demand.

On the other side of the comparison, its central scenario includes “Lower energy costs-a boon for economies of energy importers in Europe/ Asia”.

Japan would benefit both from a smaller energy burden and, in the bank’s assessment, fiscal support that could encourage investors to bring money home.

Its policy scenario includes “Fiscal dominance in the US and Fed rate cuts in H227”, allowing government financing pressures to influence monetary policy.

That contrasts with BNP’s unchanged US rate over that period.

A smaller US rate advantage would reduce one incentive to hold dollar assets rather than yen assets. The accompanying growth and portfolio assumptions matter because a lower interest-rate gap alone does not ensure capital will return to Japan.

The bank treats a persistent energy shock and a disorderly end to the AI boom as risks to its central scenario, rather than assuming that every form of US weakness would produce an orderly dollar decline.

The BoJ’s next decision

Japan’s September inflation figures showed prices excluding fresh food rising 2.1% annually.

Excluding energy as well, inflation was 2.4%, leaving broader price pressure for the BoJ to assess.

The BoJ’s 29-30 October meeting will bring an updated outlook against that backdrop.

The US side remains equally important: Mizuho has argued that lower US yields could support yen gains without requiring an aggressive Japanese hiking cycle.

What This Means for USD/JPY

A BoJ hike by itself would not settle the argument: the accompanying inflation outlook and the expected gap with US rates would still matter.

Crédit Agricole’s 150 view rests on a more favourable combination for Japan, with easing energy pressure, less dominant US growth and a narrower rate gap. Those conditions would support a recovery beyond a brief response to a central-bank announcement.

A persistent energy shock would be particularly awkward for Crédit Agricole’s recovery case, weakening an important source of relief for Japan. The BoJ’s next inflation outlook may clarify how much of that burden it expects households and businesses to absorb.

The US Dollar Index is trading near 102.43 on the 4-hour chart after extending its recovery from the 101.54 support area. What stands out to me is that price has reclaimed the short-term moving average and continues to hold above the rising trendline, keeping the broader structure constructive. The recent sequence of higher lows also suggests buyers remain in control, although DXY is now approaching another important resistance area.

The first resistance I am watching is 102.59. A clean break above that level would expose 102.92, followed by 103.32. On the downside, 102.03 is the first important support, with 101.54, 101.18, and 100.87 becoming more relevant if sellers regain control.

RSI is trading in the upper portion of its range, confirming strong bullish momentum but also suggesting the move is becoming somewhat stretched. I am leaning bullish while DXY remains above 102.03 and the rising trendline. A sustained break above 102.59 would strengthen the case for 102.92, while a move below 102.03 would weaken the immediate bullish setup.

Despite the pair’s price repeatedly holding above the support level at 174.90, the prevailing negative factors, including the continued formation of additional resistance at 177.80 and the main indicators providing negative momentum, increase the chances of renewed bearish attempts, with the price currently trading around 175.60.

To confirm the bearish outlook for the upcoming period, we recommend waiting for the price to break below the aforementioned support and close negatively beneath it. This would open the way toward new bearish targets, starting at 174.55 and 173.95. However, breaking above 177.80 would invalidate the current bearish scenario, giving the price an opportunity to form strong bullish corrective waves that could target 179.25, followed by the resistance level around 180.80.

The expected trading range for today is between 175.00 and 176.55

Trend forecast: Sideways

(MENAFN– Daily Forex) The U.S. dollar continues to rise against the Japanese yen on Tuesday, but we have both central banks in the forefront over the next few sessions. The interest rate situation continues to be front and center here.USD/JPYThe U.S. dollar has risen slightly against the Japanese yen during the trading session here on Tuesday to reach above the 200-day EMA, although just barely. At this point, this looks like a market that is doing everything it can to try to get towards the ¥158.50 level.Top Regulated Brokers1 Get Started 74% of retail CFD accounts lose money We’ll see whether or not it can break through all of that noise, though, because, quite frankly, this is an area that could be difficult. Keep in mind, interest rates in America still far outpace Japan. But it will be all about the statement and the press conference.Interest rates are still the driver here

This week will be noisy in this particular pair, mainly due to the fact that we have an interest rate decision on Wednesday coming out of the United States, expected to be unchanged. Friday morning in Asia, we will have the Japanese releasing their latest interest rate decision statement and press conference. That obviously will be a big mover here.

EURUSD Chart by TradingViewAll things being equal, if the market were to break above the ¥159 level, I think that would be a major victory for the U.S. dollar. Keep in mind that the interest rate differential favors the U.S. dollar, and the market turning around here probably needs some type of massive change from one of these two central banksPerhaps more likely than not, the Federal Reserve. If the Federal Reserve suddenly sounds dovish, then that could have this pair selling off. Right now, though, I like the idea of buying dips. I have for a while. I’ve been long of this for a while. I’ve been very patient, but get paid at the end of every day. That, of course, does help the situation if you’re long.Want to trade our USD/JPY forex analysis and predictions? Here’s a list of forex brokers in Japan to check out.