May 23, 2025 – Written by Frank Davies

STORY LINK Pound to Euro Forecast: EUR and GBP Sterling Both Secure Data Boosts

The Pound-to-Euro exchange rate (GBP/EUR) recovered strongly from lows around 1.1825 on Thursday, but was again unable to sustain a brief move above the 1.1900 level and settled just below this level.

The Pound and Euro both gained support from Friday’s data, limiting GBP/EUR moves.

The Pound may have greater scope for gains on pure economic grounds, but the Euro looks better placed structurally given scope for capital inflows.

This 1.19 area remains a key resistance area for the pair and equates to 0.84 for EUR/GBP.

Credit Agricole commented; “After five weeks of lower weekly highs, lows and closes, EUR/GBP is struggling to extend those trends to a sixth week as the pair has found strong support around 0.84.”

Nevertheless, it added; “Any close in EUR/GBP below last week’s could thus keep the downside momentum alive.”

The bank still sees scope for GBP/EUR gains to 1.2050 within the next few weeks.

On Friday, Germany reported that GDP increased 0.4% for the first quarter compared with consensus forecasts of 0.2% and followed a 0.2% contraction for the fourth quarter of 2024.

ING commented; “All in all, today’s numbers finally brought back an almost forgotten relic from the past: the German economy can still surprise to the upside. Even if the first quarter performance is clearly the result of one-offs and doesn’t look sustainable (yet), it shows that after the recent downgrading of growth forecasts for this year, the next revision is likely to be to the upside.

Dr Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, also expects a limited setback for the second quarter.

He still expressed some optimism; “A cyclical component is also observable in manufacturing – as early indicators up to May show – and the strength in consumption is what could have been expected for some time given real wage increases. Therefore, there are several reasons to believe that the upward trend will continue here.”

Following the latest minutes, there are still expectations that the ECB will continue to cut interest rates.

MUFG noted; “The tone of the minutes pointed to increased confidence in inflation returning to target, which if maintained, certainly points to the scope for the ECB to lower the policy rate into accommodative territory.”

It added; “Two more rate cuts seems likely and if global conditions worsen or EU-US trade conflicts emerge, three cuts would be very feasible.”

Rabobank noted some evidence of hawkish ECB elements, but added; “we do not believe that this changes the outlook for the June meeting: a rate cut is still very likely.”

Overall yield spreads will tend to limit Euro support, but there is also evidence of further inflows into the Euro.

According to ING; “We think the euro is continuing to benefit from being the most liquid alternative to the dollar. There is also evidence that portfolio re-allocation is helping the euro.”

UK data was also broadly favourable with retail sales increasing 1.2% for April compared with consensus forecasts of a 0.3% gain, although the March increase was revised to 0.1% from 0.4%.

The GfK consumer confidence index also improved to -20 for May from -23 the previous month.

The data boosted expectations over the short-term UK outlook.

Credit Agricole commented; “The GBP was still able to fare better than the EUR yesterday, as a material improvement in the UK flash PMI for May contrasted with an unexpected deterioration in the same marks for the Eurozone.”

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TAGS: Pound Euro Forecasts

• GBP/USD trades at its highest level since February 2022 near 1.3500.
• Retail Sales in the UK rose at a stronger pace than expected in April.
• The US Dollar stays under heavy selling pressure on fiscal concerns.

After struggling to find direction on Thursday, GBP/USD extends its weekly uptrend and trades at its highest level since February 2022 near 1.3500 in the European morning on Friday. The technical outlook points to overbought conditions but the pair’s correction attempts could remain short-lived.

The UK’s Office for National Statistics reported early Friday that Retail Sales rose by 1.2% on a monthly basis in April, following the 0.1% increase recorded in March. This print came in better than the market expectation of 0.2% and boosted Pound Sterling to begin the European session.

On the other hand, the US Dollar (USD) stays under strong selling pressure after managing to keep its footing on the back of upbeat flash S&P Global Purchasing Managers Index (PMI) data releases for May on Thursday. Investors grow increasingly concerned over the US debt staying on an unsustainable path after United States (US) President Donald Trump’s sweeping tax and spending bill passed the Republican-controlled House of Representatives on Thursday.

The bill now moves to the Senate, which will kick off deliberations after the Memorial Day holiday and will try to have a vote before July 4.

In the absence of high-impact macroeconomic data releases, the USD could have a difficult time finding demand heading into the weekend, allowing GBP/USD to end the week decisively higher.

GBP/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart rose above 70 for the first time since late April, reflecting overbought conditions in the near term.

On the downside, 1.3440-1.3450 (static level, former resistance) aligns as immediate support before 1.3400 (static level, round level) and 1.3360 (50-period Simple Moving Average). Looking north, additional gains toward 1.3560 (static level from February 2022) and 1.3600 (static level, round level) could be seen once GBP/USD stabilizes above 1.3500 (static level, round level).

• The USD/CAD forecast indicates a growing likelihood that Trump’s tax bill will be passed into law.

• Traders are pricing a 67% chance of a Fed rate cut in September.

• Market participants are pricing a 27% chance of a BoC rate cut in June.

The USD/CAD forecast indicates a growing likelihood that Trump’s tax bill will be passed into law, increasing the US government’s debt and hurting the dollar. Meanwhile, in Canada, BoC rate cut expectations have fallen significantly, supporting the loonie. 

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The US dollar fell on Thursday and Friday after Trump’s tax bill passed through the House of Representatives. This development increased US fiscal health worries, prompting investors to dump US assets. On Monday, Moody’s cut the US government’s credit rating due to its growing debt. The move hurt investor confidence. If Trump’s bill passes, it will increase the government’s debt, further shaking confidence in the economy. 

Furthermore, the fiscal worries overshadowed a report on Thursday showing an improvement in US business activity. Fed policymakers are still cautiously watching incoming data for signs of weakness after Trump’s tariffs. Downbeat economic data will increase pressure on the central bank to lower borrowing costs. At the moment, traders are pricing a 67% chance of a cut in September. 

Meanwhile, BoC rate cut bets continued falling after Canada’s hotter-than-expected core inflation figures. Market participants are pricing a 27% chance of a rate cut in June, meaning there is a higher likelihood of a pause. However, policymakers will keep studying incoming data. 

USD/CAD key events today

• Canada core retail sales m/m
• Canada retail sales m/m

USD/CAD technical forecast: Bears eye the 1.3800 support level

On the technical side, the USD/CAD price has continued its slide after breaking out of its triangle pattern. The price trades well below the 30-SMA, while the RSI is nearing the oversold region. This shows the bearish bias is strong. 

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After the breakout, the price paused its decline to make a lower high. At the moment, bears have returned and are about to break below the previous low. Such a move would strengthen the bearish bias. Moreover, a strong move could push the price below the 1.3800 level, confirming a new downtrend.

On the other hand, if the 1.3800 support holds firm, the price might bounce to retest the 1.3900 resistance level. Still, the bearish bias will hold if the price remains below the 30-SMA.

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Copper price began today’s trading with a new positivity by surpassing the barrier at $4.6600, announcing its readiness to activate the bullish track in the current period, the unionism of providing positive momentum by the main indicators will reinforce the chances for achieving several gains, to reach the initial target at $4.7500, to press on 61.8% Fibonacci correction level at $4.8100.

Note that activating the negative track requires forming a sharp decline, to settle below $4.5000 level, to confirm targeting several negative stations that begin at $4.4300 and $4.3100.

The expected trading range for today is between $4.6100 and $4.7500

Trend forecast: Bullish

May 23, 2025 – Written by Ben Hughes

STORY LINK GBP/USD Forecast: Pound Sterling “Mid Performer” Following US, UK PMIs

The Pound-to-Dollar exchange rate (GBP/USD) was rangebound on Thursday following the release of the US’s and UK’s preliminary S&P Global PMIs.

At the time of writing, GBPUSD was trading at approximately $1.3425, virtually unchanged from the start of Thursday’s session.

The US Dollar (USD) advanced against most major peers on Thursday, supported by stronger-than-expected PMI data for May.

Fresh figures from S&P Global revealed an uptick in both the manufacturing and services sectors, surprising markets who had projected a slowdown.

Manufacturing activity jumped to 52.3, defying expectations of a decline to 50.1, while the services PMI also rose to 52.3, indicating a broad-based expansion.

Commenting on the data, S&P’s Chris Williamson noted an encouraging rebound in business sentiment, crediting the easing of tariff pressures for lifting outlooks.

The upbeat economic data boosted confidence in the US economy and helped lift the ‘Greenback’ against a range of currencies, although gains against the Pound were more limited.

Sterling traded steadily on Thursday, and even rose against several of its counterparts, following the release of the UK’s latest PMI readings for May.

Although manufacturing activity remained in contraction, with the index edging down to 45.1, the services sector surprised to the upside.

The services PMI climbed back above the 50 threshold, exceeded economists’ expectations by hitting 50.2, and signalled a return to modest growth.

This glimpse of resilience in the UK’s dominant services industry offered some reassurance to markets, helping the Pound maintain its footing during Thursday’s European session.

“GBP is down 0.2% vs. the USD and a mid-performer among the G10, trading relatively well despite a generally disappointing preliminary PMI release. The manufacturing print disappointed with a relatively deep contractionary print of 45.1 while services climbed just above the expansion threshold, printing 50.2.” – Scotiabank

The Pound US Dollar (GBP/USD) exchange rate could come under pressure on Friday, with investors eyeing the UK’s latest retail sales data for direction.

April’s figures are expected to indicate a slowdown in consumer activity, with sales growth forecast to ease from 0.4% to 0.2%.

Any downside surprise could sour sentiment towards Sterling by fuelling concerns about the UK economy.

Meanwhile, with a quiet end to the week for US economic releases, the spotlight may shift to a scheduled speech from a Federal Reserve policymaker.

If the remarks lean dovish, the US Dollar could extend its recent losses, adding another layer of volatility to the currency pair heading into the weekend.

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TAGS: Pound Dollar Forecasts