– Written by


David Woodsmith

STORY LINK GBP/USD Forecast: Pound Sterling Near Six-Month Best Exchange Rate

The Pound to US Dollar exchange rate (GBP/USD) opened the new week on strong footing, pushing to a fresh six-month high as broad-based selling pressure continued to undermine the US Dollar.

At the time of writing, GBP/USD was trading close to $1.3671, representing a gain of around 0.3% compared with Monday’s opening levels.

The US Dollar (USD) remained on the back foot at the start of the week, extending a sell-off that dragged the currency to multi-month lows in the previous session.

Fresh pressure on the Greenback followed renewed tariff threats from US President Donald Trump, who warned of imposing 100% tariffs on Canada should it strike a trade agreement with China. Trump argued such a deal would effectively turn Canada into a gateway for Chinese goods entering the US market.

These remarks have heightened investor unease around US trade and foreign policy, with markets increasingly unsettled by the unpredictability of the Trump administration.

Adding to the negative tone for the Dollar were renewed concerns over a potential US government shutdown, after Senate Democrats pledged to block funding for the Department of Homeland Security following the death of another US citizen at the hands of federal agents over the weekend.

Despite its strength against the US Dollar, the Pound (GBP) struggled to generate notable gains against other major currencies.

Sterling traded in a relatively narrow range amid a quiet UK economic calendar, following a week packed with high-profile data releases.

Investor caution was also fuelled by lingering domestic political uncertainty, with speculation over internal Labour Party tensions weighing on broader confidence in the UK outlook.

GBP/USD Forecast: Fed Leadership in Focus

Looking ahead, attention is likely to centre on the anticipated announcement of Donald Trump’s nominee to succeed Jerome Powell as Chair of the Federal Reserve, a development that could drive significant volatility in GBP/USD.

Should the chosen candidate be viewed as supportive of more aggressive interest rate cuts, the US Dollar may face renewed selling pressure.

Conversely, a nomination perceived as safeguarding Federal Reserve independence could help the Greenback recover some of its recent losses.

In the meantime, with little in the way of major UK data releases scheduled, movement in the Pound is expected to remain closely tied to global risk appetite and broader market dynamics.

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Created on January 26, 2026

• The Euro was grinding just a touch higher despite the fact that it initially fell as the day started. Ultimately, we find ourselves watching the same important level heading into the weekend.

EUR/USD

The Euro was grinding just a touch higher after initially falling on Friday due to the overall US dollar weakness rather than any intrinsic Euro strength. The primary driver at the moment is heightened political risk in the US, specifically the volatility surrounding the recent tariff threats around Greenland.

But this is just a momentary blip on the radar, and the question now is where these currencies deserve to be. On one hand, we have seen the dollar get punished, and money flew into places like gold and, by default, the Euro. That being said, there is immediate resistance just above the 1.18 level and then again at the 1.1850 level, and I think it’s going to be very difficult to break above there as it has shown multiple times in the past.

Lack of Momentum

Because of this, I anticipate that this sets up for a shorting opportunity early in the week next week, as Friday has shown a real lack of momentum or, quite frankly, interest at this point in time. With that being the case, I think the overall range remains from 1.14 on the bottom to 1.1850 on the top.

The 50-day EMA has provided short-term support between those two levels over the last couple of days and currently sits at the 1.1675 level. Ultimately, I think this is a market that doesn’t really have anywhere to be anytime soon, although it’s clear that the bullish behavior is fairly resilient. But the question now is, as we rise towards the major resistance barrier, is there anything to make it break out? As things stand right now, it.

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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.

The GBPJPY pair approached from the main target at 215.00 level, forming strong barrier against the attempt of resuming the bullish attack, to force it form strong corrective decline, to resume forming bearish price gap this morning, to settle below the bullish channel’s support at 210.95 level.

The stability below the broken support and providing bearish momentum by the main indicators will confirm the dominance of the bearish bias, to expect suffering extra losses by reaching 209.65 followed by %200 Fibonacci extension level at 208.50.

The expected trading range for today is between 209.65 and 210.80

Trend forecast: Bearish by the stability of 211.00

The GBPJPY pair approached from the main target at 215.00 level, forming strong barrier against the attempt of resuming the bullish attack, to force it form strong corrective decline, to resume forming bearish price gap this morning, to settle below the bullish channel’s support at 210.95 level.

The stability below the broken support and providing bearish momentum by the main indicators will confirm the dominance of the bearish bias, to expect suffering extra losses by reaching 209.65 followed by %200 Fibonacci extension level at 208.50.

The expected trading range for today is between 209.65 and 210.80

Trend forecast: Bearish by the stability of 211.00