The British pound, I think, is probably going to be somewhat range-bound, mainly because the British pound, of course, has a higher interest rate attached to it. So, it is a little insulated from US dollar strength, and I think most of the reaction was more about the US dollar than anything else.

I wouldn’t read too much into British pound weakness, because at this point in time, even if I want to buy the US dollar, I am going to short other currencies, weaker currencies.

The British pound for me is what I want to buy if the US dollar starts to roll over. Right now, it looks pretty weak, so while shorting the pound could be possible in this general vicinity, the reality is we will probably get more mileage out of other currencies.

USD/CAD Technical Analysis

The EURJPY pair confirmed its submission to the bearish corrective bias by posting a new negative close below the barrier at 186.05. The pair is currently responding to the negative pressure from the Stochastic indicator, slipping toward 185.20.

We expect the pair to resume its corrective attempts, targeting 184.85 and 184.40 respectively. However, a successful break above the previously mentioned barrier and holding above it would confirm the pair’s readiness to resume its main bullish attack, with the next target expected at 186.65.

The expected trading range for today is between 184.40 and 185.50.

Trend forecast: Bearish

– Written by


James Fuller

STORY LINK Pound-to-Dollar Forecast: Hawkish Warsh Boosts USD, GBP Retreats to 1.3530

The Pound to Dollar (GBP/USD) exchange rate came under renewed pressure at the end of last week as a hawkish Jackson Hole speech from Federal Reserve Chair Kevin Warsh strengthened expectations of another US interest-rate increase.

GBP/USD retreated to around 1.3535 on Friday, down almost 0.5% on the day and well below the six-month highs above 1.3670 recorded earlier in August.

The Pound was unable to make headway in global markets, while the Dollar received fresh support as investors reassessed the outlook for Federal Reserve policy.

There remains an important support area around 1.3500-1.3550.

Scotiabank had maintained a constructive technical stance; “We see near-term support around 1.3600 and 1.3550. The trend from late June remains bullish however.”

Friday’s move below 1.3550 therefore weakens the immediate technical picture, although GBP/USD remains above the broader summer lows.

Warsh Revives September Fed Hike Expectations

Federal Reserve Chair Kevin Warsh used his first Jackson Hole speech to reinforce the central bank’s commitment to returning inflation to its 2% target.

Warsh warned that financial conditions remained relatively loose and indicated that the Fed could need to raise interest rates if inflation fails to moderate sufficiently.

His comments represented a more hawkish message than investors had expected.

Markets subsequently raised the probability of a September rate increase to around 55%, compared with roughly 35% ahead of the speech.

This shift in expectations provided renewed support for US bond yields and the Dollar.

Danske Bank had commented ahead of the speech; “Markets will look for any hints about monetary policy in September.”

The speech ultimately provided a clearer signal than many investors had anticipated.

ING had previously maintained that the Fed would remain on hold in September, but acknowledged that stronger data or more hawkish communication could change market pricing.

The coming US inflation and employment figures will now carry even greater importance.

Energy Prices Remain Important for Central Banks

Energy prices will continue to be an important backdrop for monetary policy on both sides of the Atlantic.

MUFG commented; “The price of crude oil continues to defy expectations of sharper price rises and how the energy price story plays out over the coming weeks will be an important backdrop heading into a heavy month of G10 central bank meetings.”

Every major G10 central bank is due to meet during September, leaving markets unusually sensitive to shifts in inflation expectations and bond yields.

Higher energy prices would strengthen the argument for tighter monetary policy, while a sustained decline would reduce pressure on central banks to act.

UK rate expectations have moved in the opposite direction to the US in recent sessions.

Markets no longer fully price another Bank of England rate increase until early 2027, with only a limited probability attached to a September move.

Most economists expect the BoE to keep Bank Rate unchanged at 3.75% for the remainder of 2026.

Wider US economic fundamentals also continue to provide some support for the Dollar.

Brown Brothers Harriman global head of markets strategy Elias Haddad commented; “The big support for the dollar here is that the U.S. economy continues to outpace that of other major economies.”

He nevertheless remains cautious over the medium-term outlook.

Haddad added; “I don’t expect the dollar to make new highs, because of the risk of a more dovish Fed repricing and the lack of U.S. fiscal credibility are two big headwinds.”

US fiscal concerns remain significant, particularly after the recent surge in long-term Treasury yields and the Treasury’s decision to expand bond buybacks.

European central bankers have also expressed unease over increasingly unconventional US Treasury actions and the risk that political pressure could spill over into monetary and currency policy.

Near-Term GBP/USD Forecast: 1.35 Support Comes into Focus

GBP/USD has now surrendered most of the gains made during the middle of August.

The 1.3500-1.3530 area is the immediate support zone.

A sustained break below 1.3500 would weaken the short-term structure further and could expose 1.3450 followed by the August low around 1.3420.

On the upside, Sterling would need to regain 1.3600 to ease the immediate downward pressure.

A recovery above 1.3650 would be required to restore the stronger bullish structure seen earlier in August.

The combination of higher Fed rate expectations and weaker Bank of England tightening bets favours the Dollar, leaving upcoming US inflation and labour-market data crucial for the next GBP/USD move.

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TAGS: Pound Dollar Forecasts

The Pound-Dollar rate has fallen back to 1.3534 after Jackson Hole, but UBS still sees Sterling at 1.40 by December and 1.41 through much of 2027.

The Pound to Dollar (GBP/USD) exchange rate ended Friday at 1.3534, down 0.46% after Kevin Warsh revived expectations for another Federal Reserve rate increase.

That leaves Cable well below its August high at 1.3675, but UBS has made no retreat from its bullish medium-term Sterling path.

Its updated forecast table reads: “GBP/USD: 1.40 Dec 2026, 1.41 Mar 2027, 1.41 Jun 2027, 1.41 Sep 2027.”

The rationale was set out more fully by UBS strategists Constantin Bolz and Dominic Schnider earlier this month.

“UK politics have shifted from a headwind to a potential tailwind,” they said, while “[Pound] Sterling remains relatively under-owned.”

That under-ownership matters if investors return after Friday’s Dollar-driven correction.

UBS has also argued that “long-dollar positioning remains vulnerable to a reversal”, creating scope for “existing long-dollar positions [to] be unwound” if Fed expectations soften again.

Friday went the other way.

Warsh pushed the implied probability of a September Fed hike from around 35% before his speech to 57.5%, while Sterling suffered its first weekly decline against the Dollar in more than a month.

We previously examined UBS’s increasingly positive Sterling view before the Jackson Hole reversal.

The forecast now has a cleaner test: holding around 1.35 would leave the 1.40 year-end scenario plausible, while renewed Fed tightening pressure would make the first hurdle, around 1.38, considerably harder to clear.

Our currency coverage draws on live market data, official economic releases and published bank research.

USD/JPY is back above 160 despite record intervention, reinforcing UniCredit’s warning that FX operations struggle when fundamentals resist them.

The US Dollar to Japanese Yen (USD/JPY) exchange rate closed Friday at 160.10, almost five Yen above the lows reached after the extraordinary joint US-Japan intervention.

That rebound is the uncomfortable backdrop to UniCredit’s question: “Is FX intervention a ‘losing game’? The JPY’s case.” The current analysis was published on 26 August.

UniCredit analysts had already made their underlying objection unusually clear before the joint operation.

“It would be a waste of FX reserves if the USD is already strong due to factors outside of Japan’s control,” the bank argued in earlier Yen analysis.

At the same time, UniCredit expected officials to keep trying: “We expect intervention to resume.”

The issue was never whether intervention could move USD/JPY for a few sessions.

It was whether intervention could overcome the interest-rate gap, expansionary Japanese fiscal policy and the economic damage from high imported energy costs.

Japan has now spent a record ¥15.4tn, around $96.5bn, intervening between 30 July and 26 August, yet Dollar-Yen finished August back above 160.

That outcome gives the “losing game” thesis more force.

As we noted in our recent Yen forecast, markets increasingly need the Bank of Japan to do part of the work itself.

A September rate increase could help.

Without a credible path towards further tightening, another intervention may again prove spectacular in the moment and frustratingly temporary afterwards.

Our currency coverage draws on live market data, official economic releases and published bank research.