– Written by


David Woodsmith

STORY LINK GBP/USD Forecast: Pound Sterling Holds above 1.32 ahead of Fed Minutes

The Pound US Dollar (GBP/USD) exchange rate moved modestly higher on Tuesday as a brighter mood across financial markets reduced demand for the safe-haven US Dollar.

At the time of writing, GBP/USD was trading at around $1.3239, having edged up slightly from Tuesday’s opening level.

Demand for the US Dollar (USD) eased on Tuesday as investors became more willing to move into riskier assets.

Wall Street’s technology-led rally helped lift broader market sentiment, while a retreat in oil prices offered further reassurance after elevated energy costs had contributed to recent concerns over inflation and global growth.

Despite Tuesday’s pullback, USD remained close to multi-month highs.

The US Dollar Index was hovering around 102.2 after gaining almost 1% during the previous week, while elevated US Treasury yields continued to provide the currency with a degree of underlying support.

Sterling (GBP) traded within a relatively narrow range on Tuesday morning as investors awaited comments from Bank of England (BoE) policymaker Catherine Mann.

Mann was one of three Monetary Policy Committee (MPC) members to vote for an immediate 25-basis-point rate increase at September’s meeting.

Her latest remarks could therefore attract considerable attention from GBP traders.

Any indication that she continues to favour higher borrowing costs could strengthen expectations for a November hike and provide another lift for Sterling.

Near-Term GBP/USD Forecast: Fed Minutes to Offer Fresh Policy Clues

Wednesday’s release of the minutes from the Federal Reserve’s September meeting is likely to provide the next significant catalyst for the Pound US Dollar (GBP/USD) exchange rate.

Investors will be looking for clues about how much support there is within the central bank for additional interest rate increases.

An especially hawkish set of minutes could revive some expectations for tighter policy, although a return to firm October hike bets appears unlikely.

Should the minutes instead reinforce the possibility of a December increase, the US Dollar could find some support.

Sterling’s gains may remain limited in the meantime, with traders likely to adopt a cautious stance ahead of Thursday’s busy schedule of BoE speakers, including Governor Andrew Bailey.

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USD/JPY remains stuck near resistance at 158.00 – 158.50 despite the pullback in Treasury yields. I’d note that USD/JPY has become less sensitive to Treasury yield dynamics in recent trading sessions.

Today, traders focused on BoJ Governor Ueda speech. Ueda said that BoJ would continue to raise the interest rate.

If USD/JPY climbs above the 158.50 level, it will move towards the next resistance level at 160.00 – 160.50. On the support side, a move below the 50 MA at 157.76 will push USD/JPY towards the 157.00 level. If USD/JPY settles below 157.00, it will head towards the support level at 155.00 – 155.50.

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The first chart I’m watching is the U.S. 2-year yield. It is dropping a little bit during the trading session. That could provide a little bit of relief for some risk appetite-based assets. We’ll just have to wait and see. But right now, it is still elevated, so I think anti-U.S. dollar sentiment is probably somewhat short-lived.

There is no change on the temporary sideways moves of GBPJPY pair, to fluctuate near 209.00 level due to the continuation of the main indicators’ contradiction, which obstacles the chances of resuming the main bearish trend, the sideways trading might continue temporarily until gathering negative momentum, attempting to press on 208.10 barrier, which extend the trading towards the main negative stations near 206.80 and 206.25.

While the risk of changing the negative trend and begin building a bullish path, which requires surpassing 210.45 and holding above it, to begin recording several gains to expect forming an initial station at 211.35. 

The expected trading range for today is between 208.10 and 209.55

Trend forecast: Bullish

• EUR/JPY could find initial support at the lower boundary of the channel around 176.60.
• The 14-day Relative Strength Index is at 29.78, signaling potential seller exhaustion and eventual stabilization.
• The primary resistance lies at the nine-day EMA at 178.18.

EUR/JPY halts its seven-day losing streak, trading around 177.40 during Asian hours on Tuesday. Technical analysis of the daily chart shows that the currency cross is remaining close to the lower boundary of the descending channel, suggesting the price holds support and a temporary bounce. However, a break below the channel would signal accelerating downward momentum in a steeper downtrend.

The EUR/JPY cross is maintaining a bearish tone as it holds beneath both the nine- and 50-period Exponential Moving Averages (EMAs). The currency cross has recently slipped below the nearer structural floor at 175.70, turning recent price action into a corrective phase, while the 14-day Relative Strength Index (RSI) at 29.78 hovers in oversold territory, hinting that while downside pressure is strong, fresh selling could become more measured in the short term.

The initial support lies at the lower boundary of the channel around 176.60, followed by an 11-month low of 175.70, recorded in November 2025. Further support lies at the 14-month low of 169.72.

On the upside, the EUR/JPY cross may rebound and test the nine-day EMA at 178.18, followed by the 50-day EMA at 181.20. Further resistance lies at the upper boundary of the descending channel around 184.20, followed by the all-time high of 187.95 set on April 17.

ECB tone softens as Lagarde flags growth risks from rising yields

Analysts at Commerzbank argue that the ECB has scope to ease market tensions through communication before resorting to more forceful tools. They note that, despite elevated inflation, ECB representatives could “adopt a less hawkish tone in their public comments, thereby dampening expectations of interest-rate hikes and easing pressure on government bonds.” In their view, Christine Lagarde’s recent appearance before the European Parliament’s Committee on Economic and Monetary Affairs already points in this direction, as she stressed that “the sharp rise in bond yields would dampen economic growth and limit the pass-through of higher energy costs to consumers,” signalling greater sensitivity to the impact of tighter financing conditions.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

U.S. Dollar Index gains ground as traders react to ISM Services PMI report. The report showed that ISM Services PMI declined from 55.4 in August to 54.9 in September, compared to analyst forecast of 55. Numbers above 50 show expansion. The weaker-than-expected report did not put any pressure on the American currency.

Currently, U.S. Dollar Index is trying to settle above the resistance level at 102.35 – 102.50. In case U.S. Dollar Index manages to settle above the 102.50 level, it will head towards the next resistance, which is located in the 103.35 – 103.50 range.