– Written by


David Woodsmith

STORY LINK GBP/USD Forecast: Pound Sterling Falls to Near One-Month Low

The Pound to US Dollar (GBP/USD) exchange rate fell to its weakest level in almost a month overnight on Wednesday as a sharp sell-off in technology stocks drove investors towards the safe-haven US Dollar.

At the time of writing, GBP/USD was trading at around $1.3258, having recovered slightly from an overnight low of $1.3251. However, Sterling remained under pressure despite encouraging UK economic growth figures.

The US Dollar (USD) strengthened during Wednesday evening’s session as heightened risk aversion across global financial markets increased demand for safer assets.

A sharp decline in technology stocks unsettled investors, with controversy surrounding US chipmaker Nvidia adding to concerns about the outlook for the sector.

The initial reports centred on allegations that Nvidia CEO Jensen Huang had been involved in an affair with a businesswoman suspected of spying for China.

The controversy intensified on Wednesday evening following further reports alleging a second affair involving a Nvidia executive.

These claims, which remain allegations, prompted speculation that the company’s board could be preparing to remove Huang as chief executive.

The uncertainty weighed on sentiment towards technology stocks, a sector that has attracted substantial investment amid the rapid expansion of artificial intelligence infrastructure.

With investors already cautious about elevated technology valuations, the latest developments contributed to a broader deterioration in market sentiment.

The resulting demand for safe-haven assets helped the US Dollar maintain its recent strength, leaving the currency trading close to monthly highs.

Geopolitical developments also supported the ‘Greenback’.

Hopes of a diplomatic breakthrough between Washington and Tehran appeared to fade, raising concerns that the conflict in the Middle East could continue.

The prospect of prolonged tensions encouraged investors to adopt a more defensive approach, providing another source of support for the Dollar.

The Pound (GBP), meanwhile, struggled to recover despite the release of stronger UK economic growth figures.

Data from the Office for National Statistics (ONS) showed that the British economy expanded by 0.7% during the third quarter, accelerating from 0.5% in the previous three months.

The reading marked the UK’s strongest quarterly growth in more than two years, offering some reassurance about the economy’s resilience despite elevated borrowing costs.

However, the figures were broadly in line with market expectations, limiting their ability to generate fresh demand for Sterling.

Investors had already anticipated an improvement in economic activity, meaning the release offered little reason to substantially revise expectations for the Bank of England’s (BoE) monetary policy outlook.

The stronger growth figures may provide some reassurance that the UK economy can withstand further interest rate increases, particularly following last week’s decision to raise Bank Rate to 4%.

Nevertheless, concerns about persistent inflation and the potential impact of additional monetary tightening continue to complicate the outlook for Sterling.

The Pound was also held back by the deterioration in global risk appetite.

As an increasingly risk-sensitive currency, Sterling often struggles when investors become more cautious and favour the relative security of the US Dollar.

This left GBP/USD unable to stage a convincing recovery, despite the encouraging domestic economic figures.

Near-Term GBP/USD Forecast: Could US Inflation Data Push Sterling Below $1.32?

The Pound to US Dollar exchange rate could face further pressure on Friday as investors turn their attention to the latest US producer price index (PPI).

October’s factory-gate inflation figures are expected to show another increase in prices, although the pace of monthly growth is forecast to have moderated.

The release will be closely watched following Tuesday’s stronger-than-expected US consumer inflation figures, which reinforced expectations of further Federal Reserve interest rate increases.

Another upside inflation surprise could strengthen the case for additional monetary tightening, potentially providing further support for the Dollar.

If the figures encourage investors to anticipate a more aggressive approach from the Federal Reserve, GBP/USD could extend its recent decline.

The $1.3250 area represents an immediate reference point following Thursday’s overnight low.

A sustained move below this level could expose Sterling to further selling pressure, potentially bringing the psychologically important $1.3200 threshold into focus.

However, softer-than-expected US producer inflation could offer the Pound some relief by reducing expectations of further aggressive interest rate increases.

Broader market sentiment will also remain an important influence.

Further developments surrounding Nvidia could affect confidence in technology stocks, particularly if the controversy leads to additional uncertainty over the company’s leadership.

A renewed sell-off across the sector could encourage investors to seek the relative safety of the US Dollar, placing additional pressure on GBP/USD.

Geopolitical developments may also influence the pairing, with investors continuing to monitor diplomatic efforts between the US and Iran.

Any escalation in tensions could reinforce demand for safe-haven currencies, while signs of progress towards a negotiated settlement may help restore risk appetite.

For Sterling, Thursday’s stronger UK GDP figures offer some underlying reassurance, but the Pound may struggle to capitalise on the data while global markets remain unsettled.

With GBP/USD trading around $1.3258, a recovery towards $1.3300 may depend on an improvement in market sentiment or a softer US inflation reading.

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TAGS: Pound Dollar Forecasts

Traders also had a chance to take a look at the Existing Home Sales report for October. The report indicated that Existing Home Sales decreased by -5.5% month-over-month, compared to analyst consensus of +0.3%.

Currently, U.S. Dollar Index is trying to setlte above the resistance level at 103.15 – 103.30. In case this attempt is successful, U.S. Dollar Index will head towards the next resistance level, which is located in the 104.60 – 104.75 range.

EUR/JPY Forecast: BNP Sees Euro Gains Even as Japan Closes Interest Rate Gap

BNP Paribas expects the dollar to buy ¥163 at each quarter-end in 2027, leaving the euro’s six-cent rise against the dollar to carry it towards ¥196.

The euro to yen exchange rate slipped 0.12% to ¥177.01 on Thursday afternoon, leaving the single currency nearly nine yen short of BNP Paribas’s forecast for this December.

The bank expects one euro to buy ¥186 at the end of this year and again next March, then ¥189 in June, ¥192 in September and ¥196 in December 2027.

BNP puts the dollar at ¥163 this December and at every quarter-end in 2027.

Where the extra ten yen come from

BNP’s economists wrote on Monday, “We expect Fed hikes to temporarily offset structural headwinds and support the dollar. EUR/USD would target 1.14 by end-2026, before the dollar’s structural downtrend resumes toward 1.20 by end-2027, although political and fiscal risk may weigh on the euro next year.”

At $1.14 per euro and ¥163 per dollar, a euro buys ¥185.82, which rounds to BNP’s ¥186 forecast for December and March.

Its $1.20 euro forecast for next December works out at ¥195.60 at the same dollar-yen rate.

The rise from ¥186 to ¥196 therefore comes entirely from those six US cents in BNP’s forecasts.

BNP also expects stronger demand in the eurozone, where it puts this year’s growth at 1.1%.

“Growth is expected to strengthen to 1.6% in 2027, bolstered by increased spending on defence and infrastructure, as well as the global investment cycle in AI,” its economists wrote.

Why higher Japanese rates can coexist with a weaker yen

The European Central Bank left its deposit rate at 2.50% in October.

BNP’s economists wrote, “Given persistent inflation and resilient growth, we anticipate another 25bp hike from the ECB in December 2026, bringing the deposit rate to 2.75%, followed by an extended pause. That said, stronger than expected second-round effects could lead to more tightening than our current baseline.”

For Japan, BNP expects growth to slow to 1.0% this year.

“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,” its economists wrote.

Japan’s policy rate stands at 1.25%, its highest since 1995.

BNP puts it at 1.50% this December, 1.75% in March and 2.00% at the end of 2027.

“We expect two more hikes by the end of Q1 2027, followed by a return to a more cautious pace until the terminal rate of +2.5% is reached in H2 2028,” the bank wrote.

Eurozone rates would still exceed Japanese rates at the end of next year, but the gap would have narrowed to three-quarters of a percentage point from 1.25 points today.

On the yen’s prospects against the dollar, BNP wrote, “The USD/JPY appreciation would continue but at a more moderate pace, with the BoJ still behind the curve despite its hikes.”

The Bank of Japan reported on Thursday that October import prices rose 19.2% from a year earlier in the currencies suppliers charged, and 24.8% when expressed in yen.

Would Tokyo let the dollar settle at ¥163?

The dollar came within a fraction of ¥160 overnight.

On Thursday, Japan’s senior currency official Atsushi Mimura warned about the speed of recent moves and reminded traders of the summer’s intervention.

The finance ministry’s figures show Japan bought ¥15.4 trillion against the dollar over three days between 30 July and 3 August.

Citi’s Osamu Takashima and colleagues considered what would happen if a recovery in shares put further pressure on the yen.

They wrote, “On the other hand, if US and Japanese equities recover and the USDJPY reaches around ¥160/$, we expect the Japanese government to intervene to buy the JPY again.”

What this means for the near-term EUR/JPY

If the euro reaches BNP’s $1.20 but the dollar buys ¥160 next December, a euro would fetch ¥192, four yen below the bank’s published forecast.

At ¥160 per dollar, the euro would need to reach $1.225 to buy ¥196.

The US Dollar Index is trading near 103.04 on the 4-hour chart after breaking above the 102.83 zone, the pivot point, a level calculated from the previous period’s high, low and close that traders use to judge direction. That zone capped the index in mid-October. A rising trendline, a line connecting higher lows since early November, supports the move, and both moving averages, which track average prices over time, are below price.

Resistance, where sellers may return, is 103.15, then 103.46. Support, where buyers may step in, is 102.83, then 102.53. RSI, a 0 to 100 gauge of buying and selling strength, is near 75, which is overbought, meaning prices rose very fast, so a pause would not surprise me. I stay bullish while DXY holds 102.83. A close above 103.15 would open 103.46.

EUR/USD Technical Analysis: Euro Breaks Below 1.1098 as 1.1056 Comes Into Focus

The pair maintained its stability above the additional support level at 176.15, forming some bullish attempts that pushed it toward 177.25. However, it remains below the resistance barrier at 178.10 due to the ongoing conflict between the main technical indicators in recent sessions.

We emphasize the importance of gathering additional positive momentum to strengthen the pair’s chances of breaking above 178.10. This would pave the way for further gains toward 178.70 and 179.40. However, failure to achieve this breakout would force the pair into mixed trading, with the possibility of declining once again toward the main support level at 174.95.

The expected trading range for today is between 176.40 and 178.10.

Trend forecast: Bullish