– Written by


Tim Boyer

STORY LINK Pound to Dollar Forecast: GBP/USD Unable to Break Resistance Levels

The Pound to Dollar exchange rate (GBP/USD) found support above 1.35 on Thursday and advanced to 1.3565 after Friday’s New York open as the dollar failed to hold Thursday’s gains.

There was a limited retreat for the FTSE 100 index, although overall risk appetite held firm while volatility levels remain contained.

The Pound will tend to perform well if risk appetite holds firm.

UBS commented; “For the time being, we think the GBP can outperform against peers on a total return basis thanks to its attractive carry proposition.

UoB expects narrow ranges will prevail; “Outlook for GBP remains positive, and it may rise to 1.3620; the chances of it reaching 1.3660 this time around are more limited.”

According to Scotiabank; “Sterling is firmer on the session but yesterday’s peak and minor reversal from the 1.3595 area warrants attention as the pound topped out at a similar point in late July.

It added; “Cable has put together a solid run of gains since basing in early August but spot needs to push on through to a 1.36 handle to extend gains.”

Scotiabank added; “The pound is lagging some of its G10 peers somewhat this morning but has had a solid week overall, rising against the USD and EUR, as markets rethink the outlook for UK monetary policy after last week’s BoE decision.”

The latest UK inflation data will be released next week and will be significant for near-term Bank of England policy expectations.

Berenberg now has a more positive outlook on the UK economy and does not expect further Bank of England rate cuts, potentially underpinning the Pound.

According to the bank; “Forward looking measures of real interest rates are below pre-financial crisis. Assuming that the neutral real interest rate has rebounded from its 2010s nadir, monetary policy may not be overly restrictive now. Indeed, rising company and household inflation expectations were one reason why the BoE became more hawkish last week. We expect the central bank to pause its cutting cycle with bank rate at 4.00% until 2026.”

Federal Reserve policy will remain a key market influence. Markets remain convinced that the Fed will cut rates in September, but expectations of a 50 basis-point cut have dipped sharply following recent firm data.

Thursday’s US producer prices data was stronger than expected and indicated that there would be more serious upward pressure on consumer prices over the next few months.

US retail sales increased 0.5% for July, marginally below consensus forecasts of a 0.6% advance with a 0.3% increase in core sales.

The New York Empire manufacturing index improved further to 11.9 for August from 5.5 the previous month and well above market expectations of -1.0.

There were weaker readings for employment while inflation pressures increased slightly.

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TAGS: Currency Predictions Pound Dollar Forecasts

EUR/USD Technical Analysis

The euro rallied a bit during the trading session here on Friday, as we have seen quite a bit of US dollar weakness around the world. That being said, we’re still just chopping back and forth. There’s no real directionality in the short term, but over the long term, obviously, the euro had been quite a bit more bullish than the US dollar. Recently, we had formed a double top at the 1.18 level, so that is worth paying attention to, and we are below there. So, we’ll see. I think this is a market that’s still trying to make a few decisions.

USD/JPY Technical Analysis

The dollar has dropped against the Japanese yen to test the 50-day EMA, but it is starting to show signs of support. If we can turn around and break above that 148 yen level, then I’d be much more comfortable with my long position, but you do get paid to hang on to it, and I have been in this for a while, so that does help. A break above the 148 yen level, I believe, opens up a move to about 150.50 yen. If we break down below here, then the 146 yen level is support, right along with the 145 yen level.

Created on August 15, 2025

• The Euro at least attempted to go a little bit higher in the early part of the trading session here on Thursday, but has since fallen pretty significantly as we continue to see a lot of volatility in markets.
• With the PPI numbers coming out much hotter than anticipated in the United States, traders are starting to worry that perhaps the Federal Reserve won’t be able to cut rates as quickly as they once thought.
• What I find interesting here is the Euro has formed a bit of a double top at 1.18 and we’ve had a nice bounce, but now it looks like we’re trying to roll over again.

If we break down below the 50 day EMA, then that could send the Euro even lower, perhaps back down, and to the 1.14 level and anything below there, think could call the top.

Questions for the Fed

I think there are a lot of questions out there as to what the federal reserve can do going forward. And one of the federal reserve governors came out today and even suggested that the idea of a half point or a half percent rate cut was validated, was completely wrong by the data that the U S economy is currently producing. If that is the case, things could get rather ugly pretty quickly for the Euro because money will come right back towards the U S because the U S dollar has been so oversold.

Ultimately, this is what I’m waiting to see. I don’t want to buy the Euro. And if I did short the U S dollar, it won’t be against the Euro. At this point, we’re in a little bit of a holding pattern. We are consolidating in an area that I think we may need to make a decision from, but this chart just got quite a bit more interesting.

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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/JPY may find the initial barrier at the nine-day EMA of 171.95.
• The bullish bias is prevailing as the 14-day Relative Strength Index remains above 50.
• The primary support appears at the psychological level of 171.50.

EUR/JPY loses ground for the third consecutive day, trading around 171.80 during the European hours on Friday. The technical analysis of the daily chart suggests a prevailing bullish bias as the currency cross remains within the ascending channel pattern.

The 14-day Relative Strength Index (RSI) is positioned above the 50 mark, suggesting the bullish bias is active. However, the short-term price momentum is weaker as the EUR/JPY cross moved below the nine-day Exponential Moving Average (EMA).

The EUR/JPY cross could test the immediate barrier at the nine-day EMA of 171.95. A break above this level would strengthen short-term price momentum and support the currency cross to approach the upper boundary of the ascending channel around 173.60, followed by 173.90, the highest since July 2024, recorded on July 28, 2025.

On the downside, the EUR/JPY cross may test the crucial support level at 171.50, followed by the ascending channel’s lower boundary around 171.10 and the psychological level of 171.00. A break below this crucial support zone would put downward pressure on the pair to test the 50-day EMA at 170.09, followed by the six-week low at 169.72, which was recorded on July 31. Further declines would prompt the currency cross to reach the two-month low at 168.46, registered on July 1.

EUR/JPY: Daily Chart

• GBP/USD trades marginally higher on the day at around 1.3550.
• The pair corrected lower on hot US producer inflation data on Thursday.
• High-tier data releases from the US could influence GBP/USD’s action heading into the weekend.

GBP/USD finds support and trades marginally higher on the day near 1.3550 after posting losses on Thursday. As markets await the next batch of macroeconomic data releases from the US, the pair’s near-term technical outlook suggests that the bullish bias remains intact.

Market participants refrained from continuing to price in three 25 basis points (bps) Federal Reserve rate cuts in 2025 following the hot producer inflation data from the US, helping the US Dollar (USD) gather strength and forcing GBP/USD to stay on the back foot on Thursday.

The US Bureau of Labor Statistics reported that the Producer Price Index (PPI) rose by 3.3% on a yearly basis in July. This reading followed June’s 2.4% increase and came in much higher than analysts’ estimate of 2.5%. Other details of the data showed that the PPI and the core PPI both rose by 0.9% on a monthly basis.

Retail Sales and Industrial Production data for July will be featured in the US economic calendar on Friday. The market reaction to the Retail Sales data is likely to be straightforward and remain short-lived. A positive surprise could support the USD, while a disappointing print could weigh on the currency and help GBP/USD stretch higher.

Later in the day, the University of Michigan (UoM) will publish the preliminary Consumer Sentiment Survey for August. Rather than the headline Consumer Confidence Index data, markets could react to the One-year Inflation Component of the survey. A noticeable increase in this component could allow the USD to gather strength heading into the weekend and force GBP/USD to turn south.

GBP/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart holds slightly above 60, suggesting that the bullish bias remains intact.

Looking north, the first resistance area could be seen at 1.3590-1.3600 (static level, round level) before 1.3640 (Fibonacci 78.6% retracement of the latest downtrend) and 1.3700 (static level, round level). On the downside, support levels align at 1.3540 (Fibonacci 61.8% retracement), 1.3500 (static level, round level) and 1.3460 (Fibonacci 50% retracement, 200-period SMA).

Created on August 15, 2025

• The US dollar has shown itself to be rather resilient against the yen during trading on Thursday.
• This is mainly due to the fact that the PPI numbers came out much hotter than anticipated and I think it kind of lot of people off guard.
• If inflation is in fact going to continue to be an issue in the US, the Federal Reserve is not going to be cutting rates.

That takes that part of the equation out of the conversation. Now, we’ll see. I don’t know if that’s actually the case. But clearly, this gave the markets a lot to think about. The 148 yen level looks as if it is going to be a barrier again, but I think we eventually break above there.

Interest Rate Differential

The interest rate differential obviously keeps the US dollar much more attractive than the yen because you of course get paid to hold it for every night and especially at the end of the Wednesday session most of you will get triple swap if we break out to the upside the 151 level could be a potential target but we’ll just have to wait and see if we break down below the bottom of the candlestick for the trading session on Thursday, then the 145 yen level could be targeted.

I like buying this pair. I have liked buying this pair for some time, but I also recognize you are going to be very patient with this pair. I do think that we have put in a significant bottom for the third time now near the 142 yen level. And now I think it begins at slow ascent higher. This grind will also pay you to hold onto it, so this is a bonus to say the least.

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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.