January 30, 2025 – Written by Tim Boyer

STORY LINK Pound to Euro Forecast Today: GBP/EUR Steady Ahead of ECB

The Pound Sterling (GBP) held firm near its recent highs against the Euro (EUR) on Wednesday morning, with investors adopting a wait-and-see approach ahead of key events later this week.

At the time of writing, Pound Euro (GBP/EUR) exchange rate was trading at approximately €1.1937, showing little movement from Wednesday’s opening levels.

The Euro (EUR) remained flat on Wednesday as market participants refrained from making any aggressive bets ahead of the European Central Bank’s (ECB) latest interest rate decision.

The ECB is widely expected to cut interest rates by 25 basis points when it concludes its first policy meeting of 2025 on Thursday.

While the rate cut itself appears largely priced in, the Euro’s performance will likely hinge on the bank’s forward guidance.

Should ECB officials hint at further monetary easing in the months ahead, the single currency could face additional downside pressure.

Conversely, if policymakers suggest that they would prefer to hold off from further cuts for now, it may help stem losses in EUR exchange rates.

All eyes will be on ECB President Christine Lagarde’s comments, with investors seeking clarity on the central bank’s assessment of the Eurozone economy and its resilience amid ongoing global trade tensions.

The Pound (GBP) traded in a narrow range on Wednesday as UK Chancellor Rachel Reeves outlined her ambitious plans for boosting economic growth.

In her latest speech, Reeves unveiled proposals to establish a high-tech hub between Oxford and Cambridge, dubbed ‘Europe’s Silicon Valley,’ alongside renewed government backing for Heathrow’s third runway.

The government estimates these initiatives could contribute £78bn to the UK economy over the next decade.

However, Sterling’s reaction has been muted, with businesses seeming unconvinced as they still face the increased tax burden of Reeves’s previous Budget.

GBP/EUR Exchange Rate Forecast: Eurozone GDP Weakness to Weigh on the Euro?

The ECB’s policy decision is expected to dominate the movement in the Pound to Euro exchange rate on Thursday.

However, before the ECB announcement, the Euro could come under pressure from the Eurozone’s fourth-quarter GDP figures.

Economists predict growth slowed sharply, dropping from 0.4% to just 0.1%. Signs of a stalling Eurozone economy could amplify expectations for extended ECB easing, potentially dragging the Euro lower.

Meanwhile, the absence of major UK economic data through the second half of the week may leave the Pound’s movements tied to broader market sentiment.

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Created on January 30, 2025

Bearish view

• Sell the GBP/USD pair and set a take-profit at 1.2350.
• Add a stop-loss at 1.2600.
• Timeline: 1-2 days.

Bullish view

• Set a buy-stop at 1.2450 and a take-profit at 1.2525.
• Add a stop-loss at 1.2350.

The GBP/USD pair was flat after the Federal Reserve left interest rates unchanged in its first interest rates of the year. It was trading at 1.2440 on Thursday morning ahead of the upcoming US GDP data.

Federal Reserve rates and US GDP data

The GBP/USD pair wavered after the Federal Reserve made its first interest rate decision of the year. In, the Federal Open Market Committee (FOMC) decided to leave interest rates unchanged at 4.50%.

The committee tweaked its statement by removing any mention of progress on inflation. This was likely a reaction to a recent report that showed that the headline Consumer Price Index (CPI) rose from 2.7% to 2.9% in December.

The Fed expects the headline inflation to take a longer period before moving back to the 2.0% target. The top inflation risks are the recent wildfires in Los Angeles that hav made most things, including housing and insurance expensive. There are also concerns that some of Donald Trump’s policies like mass deportations, tariffs, and tax cuts will lead to high inflation.

The Fed maintained the view that the economy was solid and that the labor market was making progress. As such, most analysts anticipate that the Fed will hold interest rates steady and then cut in July.

The next important GBP/USD news will be the upcoming US GDP data, which will shed more color on the state of the economy. Economists expect the data to show that the US capped a good year, growing by 2.7% in the fourth quarter.

The GBP/USD pair may remain under pressure now that analysts expect the Bank of England to be more aggressive in cutting rates this year since the economy is slowing.

GBP/USD technical analysis

The daily chart shows that the GBP/USD pair peaked at 1.3435 in September and has now dropped to 1.2450. Its recent rebound found substantial resistance point at the 50-day Exponential Moving Average (EMA).

The pair has moved slightly above the upper side of the descending channel pattern. It has also dropped below the Ichimoku cloud indicator. The Relative Strength Index and the MACD indicators have pointed upwards.

Therefore, the pair will likely resume the downward trend, and possibly retest the key support at 1.2350. A move above the 50-day moving average will point to more gains and invalidate the bearish view.

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Created on January 30, 2025

• For two consecutive days, the USD/JPY currency pair has been attempting to recover from recent selloffs that pushed it towards the support level of 153.71.
• Meanwhile, its recent gains extended to the resistance level of 155.80 before settling around 155.25 at the time of writing this analysis.
• Obviously, this is after interacting with the US Federal Reserve’s announcement to keep US interest rates unchanged as expected.

The Japanese Yen is still affected by central bank policies

According to Forex market trading, the Japanese Yen had recorded gains against the rest of the other major currencies, the highest for the Japanese currency in five weeks, and its gains came as the stricter policy by the Bank of Japan this year regained the spotlight after the US Federal Reserve fixed the interest rate. The minutes of the Bank of Japan’s December meeting recently revealed that the Japanese central bank is maintaining a cautious stance on monetary policy adjustments, based on inflation trends, wage growth and global economic risks.

However, the Bank of Japan raised the interest rate, and revised inflation forecasts higher at its January meeting, supporting market bets that the Japanese central bank is scheduled to continue tightening policy this year. In return, Asian currencies also received support from easing concerns about tariffs by the new US presidential administration amid conflicting comments on trade restrictions by government officials.

Trading Tips:

We still recommend buying the dollar/Japanese yen from every downward level as Trump’s policies may ultimately benefit the US dollar.

US Stocks Halt Recent Losses

During yesterday’s trading session, according to stock trading companies’ platforms, US stock indices pared their losses after the Federal Reserve left US interest rates unchanged, as expected. Meanwhile, the markets awaited a set of key earnings and continued to assess the impact of potential tariffs on major trading partners. By trade, the S&P 500 closed down 0.5%, the Nasdaq 100 fell 0.5%. Also, the Dow Jones Industrial Average ended down 0.3%, with the S&P 500 and Nasdaq 100 paring their losses by 0.8% in the afternoon.

For its part, the US Federal Reserve indicated that growth remained steady and that the labour market was stable at strong levels, while its statement lacked a previous paragraph that referred to progress in declining inflation. Nvidia shares remained in the spotlight with a 4% decline, extending their volatile momentum after claims of effective AI models from China risked the urgent need for more AI infrastructure. Meanwhile, the performance of Microsoft, Meta, and Tesla shares was mixed before their earnings after the closing bell. On a more positive note, T-Mobile US shares rose 6.3% after reporting stronger-than-expected earnings.

USD/JPY Technical Analysis and Expectations Today:

According to trading on the daily chart, the USD/JPY currency pair is trying to stop the downward correction path. Meanwhile, the strong control for the bulls will not return without returning to the vicinity of the resistance levels of 156.80 and 158.00, respectively. The last level will stimulate the move towards the psychological resistance of 160.00, with which the talk about the imminent Japanese intervention in the forex markets increases, in addition to the movement of technical indicators towards strong overbought levels. In return, and in the same time frame, the support level of 153.20 will remain the most important for strong control of the bears over the direction. The USD/JPY price today will be affected by the announcement of the US economic growth reading and the number of weekly jobless claims, in addition to the extent of investors’ appetite for risk or not.

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• EUR/USD extends its sideways grind above 1.0420 in the European session on Thursday.
• The Fed left monetary policy settings unchanged as expected.
• The ECB is widely anticipated to lower key rates by 25 bps.

EUR/USD continues to move sideways in a narrow channel above 1.0400 in the European session on Thursday after closing marginally lower on Wednesday. Investors await the European Central Bank’s (ECB) policy announcements and the Gross Domestic Product (GDP) data from the US.

The Federal Reserve (Fed) announced late Wednesday that it maintained the policy rate unchanged at 4.25%-4.5%. In its policy statement, the Fed removed the language suggesting inflation had “made progress” toward its 2% target and said the pace of price increases “remains elevated” instead. In the post-meeting press conference, Fed Chairman Jerome Powell said that there was elevated uncertainty because of significant policy shifts. “We don’t need to be in a hurry to make any adjustments,” he noted.

The US Dollar managed to stay resilient against its rivals after the Fed event but failed to gather bullish momentum. Later in the day, the US Bureau of Economic Analysis (BEA) will publish its first estimate of the fourth-quarter Gross Domestic Product (GDP) data. Markets expect the US economy to expand at an annualized rate of 2.6% following the 3.1% growth recorded in the third quarter. A weaker-than-forecast print could hurt the USD with the immediate reaction. 

The ECB is widely anticipated to cut key rates by 25 basis points. In case ECB President Christine Lagarde adopts a cautious tone regarding further policy easing, citing doubts over the continuation of the disinflation, the Euro could gather strength. If Lagarde acknowledges the worsening growth outlook and reiterates the confidence in inflation stabilizing at around their target level, the Euro could come under renewed bearish pressure.

EUR/USD Technical Analysis

The near-term technical outlook fails to provide a directional clue, with the Relative Strength Index (RSI) indicator on the 4-hour chart moving sideways slightly below 50.

On the downside, first support could be seen at 1.0380-1.0390 (200-period Simple Moving Average, Fibonacci 50% retracement of the latest downtrend) before 1.0340-1.0350 (Fibonacci 38.2% retracement, 100-period SMA) and 1.0300 (static level, round level). If EUR/USD stabilizes above 1.0440 (Fibonacci 61.8% retracement), next resistance could be spotted at 1.0500-1.0510 (round level, Fibonacci 78.6% retracement) ahead of 1.0540 (static level) and 1.0600 (beginning point of the downtrend).

The EURJPY pair surrendered to stochastic negativity yesterday, forming new negative waves to crawl below the sideways track’s support line at 161.60, to notice resuming the negative attempts this morning and settling near 160.80.

Now, the major indicators provide the negative momentum to increase the sharpness of the bearish track, to expect suffering additional losses by crawling below 160.90 level again and targeting the additional support at 160.20.

The expected trading range for today is between 160.20 and 162.10

Trend forecast: Bearish