April 23, 2025 – Written by Frank Davies

STORY LINK GBP/EUR Forecast: 3-Month Pound Sterling Forecast of 1.15

Global risk appetite has recovered strongly on Wednesday following another change in direction by President Trump.

Stronger risk conditions boosted the Pound, but the latest data triggered fresh doubts over the UK economic outlook which hampered the UK currency.

After an initial boost the Pound to Euro (GBP/EUR) exchange rate failed to hold the boost to 1.1715 with a retreat to 1.1665.

European business confidence data was also important and there was some evidence that the UK economy has been hit harder by trade fears than the Euro-Zone which hampered the Pound.

Conflicting pressures will continue with ING expecting risk conditions to dominate. It sees GBP/EUR gains to at least 1.1765 if confidence continues to improve.

Danske Bank, however, has a 3-month GBP/EUR forecast of 1.15.

The UK PMI manufacturing index retreated further to a 32-month low of 44.0 for April from 44.9 previously and in line with consensus forecasts while the services-sector index retreated sharply to a 27-month low 48.9 from 52.5 and well below expectations of 51.5.

The composite output index dipped to a 29-month low in contraction territory.

Total new work from abroad decreased sharply at the fastest pace for nearly five years.

Business confidence data dipped to the lowest level since October 2022 while employment declined further.

Costs increased at the fastest rate since February 2023 while output charges increased at the fastest rate for close to two years.

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence commented; “The biggest concern lies in a slump in exports amid weakened global demand and rising global trade worries, but higher staffing costs have also piled pressure on companies.”

He added; “The collapse in confidence and drop in output during April raise red flags as to the near-term economic outlook and add pressure on the Bank of England to reduce interest rates again at its May meeting. There will be some uncertainty, however, as to whether the recent upturn in price pressures could become entrenched or whether it merely represents a short-term tax-related spike which should be ‘looked through’.”

Capital Economics UK economist Alex Kerr expects a middle path for the bank; “Overall, although Trump’s tariffs may prove to be disinflationary for the UK eventually, the continued stickiness of near-term price pressures suggests that the Bank of England will continue to cut interest rates gradually from 4.50% now to 3.50% in the first half of next year.”

The Euro-Zone manufacturing sector was resilient for April at 48.7 from 48.6 previously while the services sector edged into contraction territory at 49.7 from 51.0 previously.

Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank commented; “the higher fiscal spending on infrastructure in Germany and defence spending across Europe should eventually benefit not just manufacturing but also the service sector, though with a bit of a lag.”

The March UK government borrowing requirement increased to £16.4 billion in March 2025 from £13.6bn the previous year and above expectations of £15.4bn.

Provisionally, the fiscal 2024/25 deficit increased to £151.9bn from £131.2bn the previous year and compared with the OBR forecast of £137.3bn.

Revenue increased, but there was a larger increase in spending. Debt interest payments increased to £4.3bn in March, the highest March figure since monthly records began in 1998.

According to Capital Economics deputy chief UK economist Ruth Gregory; “[Chancellor] Reeves may not be too far away from having to raise money again in the Autumn Budget, by cutting spending and/or raising taxes, to meet her fiscal rules.”

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• GBP/USD stays in negative territory near 1.3300 on Wednesday.
• The data from the UK showed a contraction in the private sector’s business activity in April.
• Markets await US PMI data and comments from central bankers.

GBP/USD dropped below 1.3250 in the Asian session on Wednesday after posting daily losses on Tuesday. Although the pair staged a rebound afterward, disappointing Purchasing Managers Index (PMI) data from the UK limited the upside.

S&P Global/CIPS Composite PMI in the UK slumped to 48.2 in April’s flash estimate from 51.5 in March, highlighting a contraction in the private sector’s business activity.

Commenting on the survey’s findings, “while recent months have been characterised by UK businesses treading water, broadly stagnating since last autumn’s Budget, businesses are reporting more of a struggle to keep their heads above water in April,” Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said.

“The collapse in confidence and drop in output during April raise red flags as to the near-term economic outlook and add pressure on the Bank of England to reduce interest rates again at its May meeting,” Williamson added.

S&P Global will publish preliminary April Manufacturing and Services PMI data for the US later in the day.

In case either of the headline PMIs come in well below 50, the USD could have a difficult time finding demand. In this scenario, GBP/USD could stretch higher with the immediate reaction. On the flip side, a positive surprise in the PMI report could boost the USD and cause the pair to turn south. Investors will also scrutinize the commentary in the report to see whether business activity is being impacted negatively by tariffs. If the publication points to a significant deterioration in the private sector’s business outlook, the USD could continue to weaken against its peers.

GBP/USD Technical Analysis

GBP/USD broke below the ascending regression channel and closed the last four 4-hour candles below the 20-period Simple Moving Average (SMA), reflecting a lack of buyer interest. On the downside, immediate support is located at 1.3260 (static level, 50-period SMA) before 1.3200 and 1.3090 (100-period SMA).

Looking north, resistances could be spotted at 1.3340 (20-period SMA, static level), 1.3400-1.3410 (round level, static level) and 1.3460 (static level).

Created on April 23, 2025

• The US dollar has shown itself to be somewhat resilient during the trading session on Tuesday, despite the fact that we plunged just below the ¥140 level.
• This is a level that of course is a large, round, psychologically significant figure, and a major swing low from previous trading.
• Because of this, I think a certain amount of “market memory” comes into the picture, meaning that we should see a certain amount of support at this point.

Technical Analysis

The technical analysis for this USD/JPY pair is obviously negative, but the ¥140 level is an area that a lot of people will be paying close attention to because it had been such a massive support previously. Furthermore, it looks as if the market is trying to form a hammer for the day, and if it does in fact do that, one would have to assume that there might be buyers willing to get involved. That being said, I prefer to have a little bit more in the way of confirmation with a move like this, and in this environment, I will be waiting for a move above the ¥143 level.

If we were to break above the ¥143 level, then I think you have a scenario where we may go looking to reach the ¥148 level again, which is where the 50 Day EMA currently resides. This of course is a technical indicator that a lot of people will be paying close attention for potential resistance. That being said, it is worth noting that market participants continue to look at this through the prism of a market that will be moving on the latest tariff headlines, and of course risk appetite in general. Remember, the Japanese yen is considered to be the ultimate “safety currency” for a lot of traders, and with that being said, this pair will continue to be highly sensitive to the latest headlines involving the tariff war.

Want to trade our USD/JPY forex analysis and predictions? Here’s a list of forex brokers in Japan to check out.

• EUR/USD rebounds from weekly lows, trades above 1.1400.
• The near-term technical outlook is yet to point to a buildup of bullish momentum.
• The US economic calendar will feature preliminary PMI data for April.

EUR/USD came under bearish pressure and closed deep in negative territory on Tuesday. After extending its decline to a fresh weekly low near 1.1300 in the Asian session on Wednesday, the pair regained its traction and recovered above 1.1400 in the European session.

US President Donald Trump said at a press conference late Tuesday that he had no intention of firing Federal Reserve (Fed) Chairman Jerome Powell, despite being frustrated with high interest rates. This comment eased fears over the Fed losing its independence and helped the US Dollar (USD) erase a large part of Monday’s losses.

The data from the Eurozone showed on Wednesday that the business activity in the service sector contracted in April, with the flash HCOB Services Purchasing Managers (PMI) Index dropping to 49.7 from 51 in March. In the same period, the HCOB Composite PMI declined to 50.1 from 50.9.

Assessing the survey’s details, “the European Central Bank is getting some mild support for its rate-cutting stance from the price indicators in the services sector, which the monetary authorities are closely watching,” said Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank. “Costs have risen at a similar rate to March, but the increase in selling prices has slowed significantly.”

In the second half of the day, the US economic calendar will feature preliminary S&P Global PMI data. In case both the Manufacturing and Services PMIs arrive above 50, the USD could stay resilient against its rivals and make it difficult for EUR/USD to extend its recovery. On the other hand, the USD could come under additional selling pressure if the details of the survey highlight a significant deterioration in the private sector’s sentiment due to the uncertainty created by the Trump administration’s new tariff regime.

EUR/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart stays near 50, reflecting a neutral stance in the near term. Additionally, EUR/USD rose above the 50-period Simple Moving Average (SMA) but it’s yet to clear the 20-period SMA.

Looking north, immediate resistance could be spotted at 1.1450 (20-period SMA, static level) before 1.1500 (round level) and 1.1550 (mid-point of the ascending channel). On the downside, 1.1360 (lower limit of the ascending channel) aligns as first support ahead of 1.1300 (static level, round level).

Copper price’s trading extended towards 68% Fibonacci correction level, recording the second target at $4.9000, to form an extra barrier against the bullish rally.

We expect price affection by some of the negative pressures, especially, stochastic attempts to exit the overbought level, which might increase the chances for activating the bearish correctional track and suffering some losses by reaching $4.7700 and $4.6800, while the price success to breach the obstacle will reinforce the chances for recording new gains that might extend towards $4.9600 reaching the next barrier near $5.0300.

The expected trading range for today is between $4.7700 and $4.900

Trend forecast: Fluctuated within the bullish track