– Written by


David Woodsmith

STORY LINK Pound to Dollar Forecast 2026: Gold and Yen Surge Expose USD Vulnerability

The Pound to Dollar exchange rate (GBP/USD) surged to fresh four-month highs above 1.3680 as the dollar slid sharply on yen intervention fears and another surge in gold prices, pushing the DXY index into a technically fragile zone.

GBP/USD Forecasts: Fresh 4-Month Best

The dollar posted sharp losses in New York trading on Friday and has lost further ground on Monday.

The Pound to Dollar (GBP/USD) exchange rate surged to a 4-month high just above 1.3680 before a slight correction

UoB commented; “We continue to expect a stronger GBP today, but given the deeply overbought conditions, any advance is likely part of a higher range of 1.3590/1.3700. In other words, GBP is unlikely to break clearly above 1.3700.

The bank notes that levels above 1.3700 are the September 2025 high of 1.3730 and the July 2025 peak at 1.3790.

There are no major UK data releases this week with global developments set to dominate GBP/USD moves.

The dollar slide was triggered to an important extent by a slump against the yen amid fears that central bank intervention to buy the yen was imminent. Overall dollar sentiment also remained negative while there was another surge in precious metals with silver and gold both jumping to fresh record highs.

MUFG commented; “The broad US dollar index (DXY) remains under downward pressure, having slipped below the 98.00 handle. The index now sits at a technically pivotal zone – any further deterioration risks opening the door to an extended phase of USD softness.”

Overnight, the Bank of Japan and Federal Reserve looked to check dollar positions against the yen. This is the final move before a potential move to actually intervene and buy the yen.

ING commented; “Suspected intervention to sell USD/JPY, plus US authorities reportedly getting involved, has prompted a near 3.5% drop since Friday morning. This is not a fundamentally driven dollar move, but the dollar risk premium can stay elevated.”

ING is not convinced that the dollar slide will continue; “away from the geopolitical risk premium being attached to US assets, the dollar’s fundamental story has not deteriorated. Plus, we suspect this week’s FOMC meeting could prove slightly dollar bullish.

It added; “for the dollar sell-off to continue like this, we will probably need to see some poor domestic US news. Away from the FOMC, this will heighten scrutiny on earnings releases from US Big Tech this Wednesday and Thursday.

The Fed will announce its interest rate decision on Wednesday with strong expectations that rates will be held at 3.75%.

Danske Bank commented; “We expect the Federal Reserve to maintain its monetary policy unchanged, in line with broad consensus and market pricing. The Fed will not publish updated projections, so the focus is strictly on Powell’s remarks.”

From a longer-term view it added; “We maintain our forecast for two more Fed cuts, in March and June, slightly ahead of market pricing.”

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TAGS: Pound Dollar Forecasts

USD/JPY Inches Higher as Yen Strengthening Lacks Follow-Through, Fed 2-Day Meeting Begins

is edging higher on Tuesday with the yen weakening amid concerns about Japan’s fiscal health on the back of Prime Minister Takaichi’s plans for aggressive spending and tax cuts. Furthermore, the market mood is more positive, which is also undermining safe-haven demand for the JPY.

Yesterday’s strengthening of the yen is lacking follow-through for now. However, the downside in the yen could be limited given the willingness of US and Japanese authorities to step in and support the currency and the BoJ’s hawkish stance.

The sharp move in USD/JPY in recent sessions highlights market nervousness over a possible intervention.

PM Takaichi has called a snap election for February 8, aiming to capitalise on her popularity to strengthen her mandate and push ahead with fiscal expansionary policies. Japanese bond yields have soared in recent weeks amid nervousness over Japan’s fiscal outlook. That same nervousness had weighed on the yen.

data is due late in the week. The BoJ lifted its growth and inflation forecasts in last week’s meeting, keeping more rate hikes on the table.

This is in contrast to the Federal Reserve, which kicks off its two-day meeting today. The Fed is expected to leave rates unchanged at 3.5% to 3.75% after three consecutive last year. Attention will be on Fed Chair Powell’s press conference for further clues on the timing of further rate cuts.

The has steadied around a 4-month low, weighed down in recent sessions by the “sell America” trade, by Trump’s threats of 100% tariffs on Canada and higher tariffs on South Korea, by fears of another US government shutdown, and by speculation of JPY intervention.

USD/JPY Forecast – Technical Analysis

USD/JPY broke aggressively below its rising trendline dating back to mid-September, and the 50 SMA, falling to a low of 153, before settling above the 154.25 support.

USD/JPY bulls are extending the recovery today towards 155.00. A rise above the 155 puts the pair on a more stable footing and brings 156.00 back into focus ahead of 157.50 as the next key resistance area to watch; this had acted as a support before the sharp selloff.

On the downside, there isn’t that much in the way of support. Should sellers take out the 153.30 low, this exposes the longer-term trendline support around 152.00. A break below here exposes the 200 SMA at 149.75.

DAX Rises as EU-India Trade Deal Is Agreed

, along with European shares, is seen opening broadly higher on Tuesday, with trade tensions, the upcoming Fed rate decision, and mega cap tech earnings all in focus.

The EU and India have concluded a free trade agreement after almost 20 years of negotiations, and space science seeks to deepen economic ties and offset the impact of Trump’s tariff policies.

The deal is expected to double EU goods exports to India by 2032, eliminating or reducing tariffs on almost 97% of those exports. This includes a range of products from automobiles and industrial goods to wine and chocolate. India has agreed to allow up to 250,000 European-made vehicles into the country at preferential duty rates.

Meanwhile, the EU will eliminate or reduce tariffs on almost 100% of goods imported from India over the coming seven years. The deal is set to give India a competitive edge in exporting labour-intensive goods, which have been hit hard by Trump’s steep tariffs.

Looking ahead, today also sees the start of the FOMC meeting ahead of tomorrow’s rate decision, where investors will be looking for clues on the timing of the Fed’s next rate cut. President Trump is expected to nominate a new Federal Reserve chair within the coming days.

In the US, 100 companies are due to release their quarterly earnings results this week. Among these firms, , , and will unveil their latest results.

DAX Forecast – Technical Analysis

 After running into resistance at 25,500, the record high, the DAX fell lower, breaking below its near-term rising trendline dating back to mid-November before finding support at 24,350 and settling above the 24,600 support. From here, the price has extended its recovery, and while remaining below the rising trendline, it is tracking the line higher. The long-term uptrend also remains intact.

Buyers, supported by momentum, will look to extend the recovery above 25,500 to fresh record highs.

Immediate support is seen at 24,600, the July and October highs. A close below here opens the door to the 50 SMA at. 24,330.

Original Post

Copper price reached $5.9700 level yesterday to settle below it, affected by the continuation of the contradiction between the main indicators, especially by stochastic exit from the overbought level, which forces it to fluctuate in sideways range by its stability near $5.8300.

We expect the price to be affected by a state of instability due to the ongoing divergence of the main indicators, despite the presence of an opportunity to edge toward $5,720.00. However, exposure to negative pressure may force it to retest the solid support near $5,510.00, while surpassing this level and holding above it will reinforce the chances of recording new gains that might extend towards $6.1200 and $6.2400.

The expected trading range for today is between $5.7500 and $6.000

Trend forecast: Fluctuating

Copper price reached $5.9700 level yesterday to settle below it, affected by the continuation of the contradiction between the main indicators, especially by stochastic exit from the overbought level, which forces it to fluctuate in sideways range by its stability near $5.8300.

We expect the price to be affected by a state of instability due to the ongoing divergence of the main indicators, despite the presence of an opportunity to edge toward $5,720.00. However, exposure to negative pressure may force it to retest the solid support near $5,510.00, while surpassing this level and holding above it will reinforce the chances of recording new gains that might extend towards $6.1200 and $6.2400.

The expected trading range for today is between $5.7500 and $6.000

Trend forecast: Fluctuating

Created on January 26, 2026

The Euro has been extraordinarily negative against the British pound on Friday, as the economic figures in the United Kingdom continue to impress, suggesting a hesitant Bank of England.

EUR/GBP

The Euro has been extraordinarily negative against the British pound during the trading session on Friday, knocking back some of the previous Euro strength as the retail sales in the United Kingdom came out much hotter than anticipated, along with the manufacturing PMI forward-looking numbers. So, it does look like inflation is going to stick around a bit in the United Kingdom, and that keeps the Bank of England perhaps thinking about keeping rates higher for longer.

It is a very similar situation to what we see at the Federal Reserve at the moment, although the Federal Reserve has become a little bit more cautious as of late. But for three years now, I have been hearing about the Fed getting ready to cut drastically, and it is yet to happen. Maybe the United Kingdom is in the same position. The European Central Bank, of course, is where it needs to be, and it is going to stay flat. So, I think that is part of what is driving this.

Major Resistance Barrier

But when you look at the longer-term chart, we had just pulled back from a major resistance barrier going back multiple years. So now, the next thing I am watching is the 200-day EMA, currently sitting at the 0.8652 level. If we break down below there, then 0.86 is your next target, followed by 0.8450.

I do think it eventually does break down. It makes a lot of sense to me. That doesn’t mean that it is easy, and it doesn’t mean that it happens quickly. But quite frankly, I don’t see why it won’t. The central bank divergence and economic numbers alone should make that a real thing.

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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.