• The GBP/USD forecast remains subdued as UK PMI data signals slowing growth.
• Fiscal deterioration and rising gilt yields weigh heavily on Sterling sentiment.
• The Fed’s hawkish tilt offsets the recent rate cut, supporting the dollar against the GBP.

The British pound came under renewed selling pressure on Tuesday after the UK PMI for September came in downbeat. The Composite PMI slipped to 51.0 against the expected 52.7 and previous 53.5. It suggests that business activity continues to expand, albeit at a slower pace. The manufacturing PMI showed a deeper contraction, falling to 46.2, below the consensus of 47.0, while services cooled to 51.9 from 54.2.

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Chief Economist at S&P Global Market Intelligence, Chris Williamson, flagged a litany of concerning news, including weak overseas demand, rising job losses, and declining business confidence. The slowdown comes against the backdrop of a strained UK fiscal outlook.

The UK public finances further declined in August as borrowing rose to £18 billion, the highest level in five years. Cumulative borrowing in the current fiscal year already exceeds official forecasts, leading to higher gilt yields. Markets are now bracing for Rachel Reeve’s autumn budget in November, which could signal fiscal tightening or more spending pressure.

Meanwhile, the Bank of England kept interest rates unchanged at 4.0% last week and reiterated its gradual approach to easing amid stubborn inflation above 2%. The fear of stagflation also persists as growth stagnates while inflation lingers higher.

On the US side, the Federal Reserve delivered its first rate cut in 2025. Still, Fed Chair Powell struck a hawkish tone, warning of weakness in the labor market while emphasizing the Fed’s commitment to controlling inflation. The retail sales data and jobless claims reinforced US growth momentum.

The combination of a hawkish Fed and a fragile UK fiscal situation is weighing on the GBP/USD, which is currently consolidating at 1.3500 after falling to the 1.3450 area last week.

Key Events Ahead

• US PMIs: The US PMIs could weigh on the pair as the data is important for the Fed to gauge economic sentiment.
• Jerome Powell’s speech: Markets await fresh guidance from the Fed Chair on future rate cuts and labor market conditions.
• Comments from Fed officials: Michele Bowman, Raphael Bostic, Stephen Miran, and Beth Hammack may shape near-term USD expectations.
• UK Autumn Budget (November): Investors will watch whether Chancellor Reeves signals fiscal tightening or additional borrowing.
• Upcoming UK data: Inflation, retail sales, and consumer confidence figures will be key in shaping BoE policy expectations.

GBP/USD technical forecast: Key MAs to set trend

The GBP/USD price wobbles around the key MAs around 1.3500 on the 4-hour chart. A sustained breakout of the 200-period MA could ignite a selling momentum leading to a deeper correction. The RSI is now out of the oversold region but remains below the 50.0 mark, indicating a prevailing weakness.

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The immediate support appears at 1.3500 ahead of the previous week’s lows of 1.3450 and then 1.3400. On the upside, 1.3550 remains the immediate target for the bulls ahead of 1.3600.

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Created on September 23, 2025

• The euro has shown itself to be a little bit positive against the Japanese yen during trading on Monday as we continue to dance around the top of an ascending triangle. Ultimately, this is a market that I think could go looking for a major swing high at the 175.53 yen level, but it is going to have to build up a little bit of momentum. Quite frankly, the markets are waning back and forth between risk on or risk off behavior.
• But as long as we get some type of risk appetite out there, I think you’ve got a very real shot at the Euro rising against the Japanese yen and perhaps trying to hit that 175.53 yen level.

Pullbacks Remain Attractive

Short-term pullbacks should see plenty of support all the way to the bottom of the triangle, which does of course have an uptrend line. And then we have the 50 day EMA sitting just below the 172 yen level. I do not wish to short this pair of the interest rate differential favors Europe, although there are higher paying currencies out there that you can trade against the yen. But this one looks like it’s particularly stable. It’s a matter of just collecting your swap at the end of every day and waiting for the market to rise. At least that’s the theory that we have at the moment. If we do drop down below the 50 day EMA, then we could get a move down to the 169.69 yen level, but right now it doesn’t look like it wants to do that. And therefore, I think we’ve got a situation where we continue to see buyers on dips and eventually a grind to the upside. The bank of Japan currently looks as if it may have to do something but right now it looks more likely to be loosening than tightening.

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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

Created on September 23, 2025

The British pound has rallied slightly during the trading session here on Monday, but you can see that we’re just hanging around the 50 day EMA. And it looks a lot like a market that is just simply going sideways after a significant drop over the course of three days. But uh this is still a market that is technically I guess up in an uptrend or maybe sideways. The 1.34 level should offer support as long as that holds. I think we’re more likely than not okay to the upside. But if we break down below 1.34, then we’ll see an acceleration of the US dollar strengthening against the British pound and probably other currencies to drop down to the 200 day EMA just above the 1.32 level. This is the so-called “line in the sand” for the trend from what I can see at the moment.

If We Do Break Lower

Anything below the 1.32 level could be rather ugly for the pound, and it probably sees the US dollar strengthening against not only the British pound but pretty much anything else and we could see just an absolute implosion to the 1.2750 level if that happens. On the upside if we can break above the 1.3750 level which has been historically important then I think the British pound is free to go looking to the 1.40 level, although it’s going to take some type of momentum to make that happen. I think we’re in a situation where people are a little concerned about the global economy. And if that’s the case, the dollar could catch a bid, so be careful with the position size, and recognize as quickly as possible if there is a major shift in risk appetite and sentiment in this market.

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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

• EUR/USD trades marginally lower on the day below 1.1800.
• Mixed PMI data from Germany and the Eurozone make it difficult for the Euro to gather strength.
• Markets await US PMI data and Fed Chair Powell’s speech.

EUR/USD stays under modest bearish pressure and trades below 1.1800 in the European session on Tuesday after closing in positive territory on Monday. The pair’s technical outlook points to a lack of bullish momentum as market focus shifts to US data and Federal Reserve (Fed) Chairman Jerome Powell’s speech.

Preliminary HCOB Manufacturing PMI in Germany declined to 48.5 from 49.8 in August, reflecting an ongoing contraction in the private sector’s economic activity. On a positive note, HCOB Services PMI improved to 52.5 from 49.3 in this period.

In the Eurozone, the HCOB Manufacturing PMI declined to 49.5 from 50.7, pointing to a contraction in the manufacturing sector, while the Services PMI edged higher to 51.4 from 50.5.

Assessing the survey’s findings, “cost inflation in the services sector, which the European Central Bank (ECB) watches closely, has eased slightly but remains unusually high given the fragile economic backdrop,” Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank (HCOB), said and added: “Selling prices have cooled more noticeably, which might just prompt the ECB to consider whether a rate cut before year’s end could be back on the table.” The Euro struggles to attract buyers following the PMI data.

In the second half of the day, the US economic calendar will feature flash S&P Global PMIs for September. Markets expect the Composite PMI to hold steady at 54.6. In case the PMI data come in better than forecast, the immediate market reaction is likely to support the USD and vice versa.

Later in the American session, Federal Reserve (Fed) Chair Jerome Powell will deliver a speech on the economic outlook at the Greater Providence Chamber of Commerce 2025 Economic Outlook Luncheon.

The CME Group FedWatch Tool shows that markets see about a 25% probability of one more 25 basis-points rate cut this year. In case Powell hints that they could lower rates twice more by the end of the year, citing worsening conditions in the labor market, investors’ positioning suggests that there is room for further USD weakness. On the other hand, the USD could stay resilient against its peers and cause EUR/USD to stretch lower if Powell suggests that they will not commit to an aggressive policy easing and assess incoming data before deciding on interest rates in the upcoming meetings.

EUR/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart declines toward 50, reflecting a lack of buyer interest.

On the downside, the Fibonacci 23.6% retracement of the latest uptrend aligns as the first support level at 1.1770. In case EUR/USD drops below this level and starts using it as resistance, 1.1730 (100-period Simple Moving Average (SMA) on the 4-hour chart) could be seen as the next support level before 1.1690-1.1700 (Fibonacci 38.2% retracement, 200-period SMA) and 1.1640 (Fibonacci 50% retracement).

Looking north, an interim resistance level could be spotted at 1.1800 (static level, round level) ahead of 1.1850 (upper limit of the ascending channel) and 1.1870 (end-point of the uptrend).

Despite the stability of the GBPJPY pair in the last period below the barrier at 200.45, but the continuation of the main indicators’ contradiction that pushed it to form sideways trading by its repeated stability near 199.60.

We will keep waiting for gathering the extra negative momentum, to ease the mission of forming new correctional waves, to target 198.60 level reaching the extra support at 197.80, while breaching the barrier will turn the bullish track back, to begin recording extra gains by its rally towards 200.90 and 201.55.

The expected trading range for today is between 198.60 and 200.40

Trend forecast: Bearish