April 23, 2025 – Written by Frank Davies

STORY LINK Pound to Dollar FX Forecast: Sterling “Near-term Consolidation Around 1.33”

The US dollar secured net gains on Wednesday with support from a second successive surge in equities during the day.

The gains in equities and dollar were driven by another U-turn from President Trump as he stated that he was not looking to dismiss Fed Chair Powell. There was also an upbeat Administration assessment of trade prospects.

The latest US business confidence data also suggested more resilience than expected which provided an element of relief surrounding the US outlook.

The Pound to Dollar (GBP/USD) exchange rate posted sharp losses to below 1.3250 before a recovery to near 1.3300.

According to Scotiabank; “We look for near-term consolidation around 1.33 and note the fact that GBPUSD’s most recent highs were not confirmed by the RSI, offering negative divergence in momentum. We look to near-term support between 1.3220 and 1.3250 and resistance between 1.3400 and 1.3420.”

MUFG is not expecting an extended recovery; “The scale of the US dollar move does point to some scope if these reports of de-escalation intensify that we could see this US dollar rebound extend further. Still, investors are likely to remain cautious and in many ways, damage is already done that likely means any US dollar recovery will be brief and relatively modest.”

According to Scotiabank; “Relief for the USD may be temporary as trade uncertainty will continue to shade US economic prospects.”

The US PMI manufacturing index improved to a 2-month high of 50.7 for April from 50.2 previously and above consensus forecasts of 49.0.

The services sector index did retreat to a 2-month low of 51.4 for the month from 54.4 and compared with expectations of 52.8.

The PMI composite index did decline to a 16-month low for the month as business confidence dipped again to the lowest level since July 2022.

Prices charged for goods and services rose at the sharpest rate for 13 months.

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence commented; “The early flash PMI data for April point to a marked slowing of business activity growth at the start of the second quarter, accompanied by a slump in optimism about the outlook. At the same time, price pressures intensified, creating a headache for a central bank which is coming under increasing pressure to shore up a weakening economy just as inflation looks set to rise.

Markets are pricing in a 65% chance of a June rate cut after no change in May.

Earlier, 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.

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 which will make Bank of England decision making notably difficult.

MUFG expressed reservations over the outlook; “The market may be reluctant to take kind of a strong view at this point in terms of how that’s likely to impact the UK economy and pound. But certainly, if you look at the (PMI) figures today it does show that business confidence did drop more sharply than expected in April, so that certainly increases the risk of the UK economy slowing down more in the second quarter.”

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TAGS: Pound Dollar Forecasts

For what it’s worth, German Flash Manufacturing came in a little hotter than anticipated, as its Services number came in a little lower than anticipated. It was a slightly mixed to negative picture coming out of the European Union. Later in the day, we’ll get manufacturing and services PMI coming out of the US and that could change things. But as things stand right now, this looks like the market is just simply trying to find some type of equilibrium right around the 1.14 level.

USD/JPY Technical Analysis

The US dollar spiked against the Japanese yen to break above the 143 yen level but then gave back quite a bit of those gains. Again, I think the PMI numbers in the United States could be a big mover here over the next 24 hours, but if we can break back above this 143 yen level, I’d be willing to start thinking about buying this pair because I think it would show a real chance at recovery. If we break down below the 140 yen level, then things could get rather ugly. We could drop, as low as maybe even 130 yen, possibly even 128 yen. So, the 140 yen level is very important.

AUD/USD Technical Analysis

The Australian dollar initially fell during the session, but turned around to rally and we find ourselves right at the 200 day EMA again. This obviously is a technical indicator that a lot of people pay attention to, and it has offered a bit of technical resistance over the last couple of days. The question at this point is, can we pick up enough momentum to continue going higher? That would be signified by a move above the 0.65 level.

And in the interim, I think we are just simply killing time trying to figure out where the next move is because quite frankly, we got here way too quickly. We will have to sort out, is this a short covering rally, as it looks like on longer term charts, or is there something positive going on here? It’s a little bit early to jump on the bandwagon of the Australian dollar, but we are definitely at a major inflection point.

For a look at all of today’s economic events, check out our economic calendar.

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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TAGS: Currency Predictions Pound Euro Forecasts

• 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.