• The GBP/USD forecast is mixed amid tariff uncertainty. 
• Volatility may spike as tariffs could be imposed relentlessly. 
• Easing UK wage growth boosts BoE’s dovish stance. 

The GBP/USD forecast remains elevated as the US dollar stays weak on Wednesday. The pair wobbled around 1.2950 during the New York session. The heat from reciprocal tariffs continues to affect the US dollar. The DXY has dropped to 104.00, reflecting the market jitters.

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Trump’s policies continue to stir sentiment, with April 02 named “Liberation Day” for the US economy. According to a White House representative, the fresh levies will take effect immediately after the announcement. Market participants suggest a tariff of up to 20% on most American imports.

US Treasury Secretary Scott Bessent stresses that the administration aims to impose the maximum tariffs on major trading allies. However, countries willing to ease non-trade barriers may receive concessions. Risk aversion is expected to surge on the day. Moreover, Trump has proposed redistributing tariffs to US households through refunds or tax dividends that could fuel inflationary pressure. Hence, the Fed may retain its restrictive stance for an extended period.

The ADP report was upbeat. A whopping 155k jobs were added in March, against an expected 105k, while the previous reading was 84k. This signals a resilient US labor market, reinforcing a delayed rate cut.

The pound trades cautiously ahead of Trump’s tariff announcement. Concerns over global trade disruptions and a potential slowdown in economic growth have dampened investor sentiment.

The UK economy is particularly vulnerable, with the Office for Business Responsibility (OBR) warning that Trump’s policies could deplete the UK government’s fiscal buffer and shrink the economy by up to 1%.

Additionally, delays in finalizing a UK-US economic deal beyond the so-called “Liberation Day” have created further uncertainty. There is speculation that the terms of the agreement could be revised post-announcement, adding to investor apprehension.

On the domestic front, easing wage growth in the UK adds to dovish expectations for the Bank of England (BoE). The Incomes Data Research (IDR) reported that median pay growth slowed to 3.5% in the three months to February, the lowest in three years.

This suggests employers are holding back on wage hikes in response to higher National Insurance (NI) contributions introduced in the Autumn Statement by Chancellor of the Exchequer Rachel Reeves.

GBP/USD Technical Forecast: No clear bias

The 4-hour chart for the GBP/USD shows a perplexing scenario. The prices remain locked in a tight range under 1.2950. The volume bars are positive for the buyers.

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However, the recent bearish candle also had a high volume. This indicates that the market is volatile but indecisive. The key level on the upside remains 1.3000, which may cap the gains, while 1.2900 is tough support to break.

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Created on April 02, 2025

• Fears of the repercussions of US tariffs on major trading partners continue to dominate Forex markets and all financial markets.
• In the case of the EUR/USD pair, it declined to the support level of 1.0777 before stabilizing around 1.0788 at the time of writing.
• As we predicted earlier, the stability of the EUR/USD below the 1.08 support level will increase selling pressure on the EUR/USD.

Euro Price Negatively Affected by Tariff Concerns

According to forex market trading, selling pressure on the EUR/USD has increased following reports that the US administration is proposing to impose tariffs of approximately 20% on most US imports, although a final decision has not yet been made. Investors are eagerly awaiting further details on President Trump’s reciprocal tariffs, which are set to take effect today, April 2, following last month’s imposition of tariffs on aluminium, steel, and automobiles, and increased tariffs on all Chinese goods.

Inflation Rates and the Future of ECB Policies

On another market-influencing front, economic data revealed that consumer price inflation in the Eurozone fell to 2.2% in March, the lowest since November 2024, driven primarily by a slowdown in services price growth. Core inflation fell more than expected to 2.4%, the lowest reading since January 2022. With slowing inflationary pressures and rising global trade tensions, expectations have grown that the European Central Bank (ECB) may cut interest rates by 65 basis points this year.

According to currency market trading, the euro rose 3% last month, supported by broad weakness in the US dollar amid a shift in US tariff policies and Germany’s approval of a major fiscal package.

Trading Tips:

The EUR/USD will remain in its downward trajectory until the reaction to US jobs data and the future of the global economic recovery after the US tariffs are implemented.

The European Central Bank is scheduled to issue its next interest rate decision on April 17, and market expectations now indicate a 72% probability of a rate cut. By then, the size of the upcoming US tariffs will become clear, as will any inevitable adjustments the White House will make.

European stocks rise ahead of a major event

During yesterday’s trading, European stock market indices rose. According to trading, the STOXX 50 and STOXX 600 indices rose by more than 1%, recovering from a four-session losing streak. This comes after the indices fell by about 1.5% the previous day to reach their lowest levels in two months, as investors prepare for the new tariffs imposed by President Trump, which are scheduled to take effect on Wednesday.

Overall, the scope of these tariffs remains unclear, with reports indicating a 20% tax on most US imports. Meanwhile, eurozone inflation slowed to 2.2% in March, in line with expectations. In corporate news, Thyssenkrupp shares rose more than 7% after analysts at Kepler Cheuvreux raised their rating to “buy,” citing increased steel and defence spending in Germany.

EUR/USD Technical Analysis Today:

According to daily chart trading, the bears’ control over the EUR/USD pair has been confirmed by stabilizing below the 1.0800 support level, paving the way for a stronger downward move. The nearest support levels for the EUR/USD today are 1.0720 and 1.0600, respectively. From the last level, technical indicators will move towards strong oversold levels. Conversely, on the same timeframe, a real reversal of the general trend to upward will not occur without moving towards and above the psychological resistance of 1.1000 again. The performance of the EUR/USD will remain subject to signals from global central bank officials, the reaction to US tariffs, and investor risk appetite, as well as the reaction to US jobs data.

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Created on April 02, 2025

• The British pound initially plunged against the Japanese yen, but we are starting to see a certain amount of technical support right around the 193 yen level.
• It’s also worth noting that the 50 day EMA and the 200 day EMA indicators are sitting right there.
• So that does suggest that there are some traders willing to step in and pick this market up.

That does make a certain amount of sense due to the fact that we get paid to hang on to this GBP/JPY pair to the long side, the interest rate differential between the United Kingdom and Japan still remains a mile wide. And of course, recently, we’ve seen the Bank of Japan suggests that they are not quite as bullish as they once were. If that does in fact end up being the case, then I think we’ve got a situation where traders are going to continue to see a lot of volatility here because this is a pair that’s driven by a lot of risk appetite issues. So that is something worth watching.

In General, I am a Buyer

But ultimately, I also think that you have to favor the upside in general, but you have to be very cautious with your position size. If we can rise above the 196 yen level, then it opens up a move toward the 200 yen level and all things being equal. That’s actually what I prefer, but if we were to break down below the lows of the trading session for Tuesday, we might have to reset and test that crucial 190 yen level underneath, which of course is a large round psychologically significant figure and an area that has been important multiple times. I am bullish, but that’s more of a long-term outlook. In the short term, expect a lot of choppy behavior.

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April 2, 2025 – Written by Frank Davies

STORY LINK Pound to Dollar Forecast: GBP/USD “Neutral” as Markets Await ‘Liberation Day’

The Pound (GBP) saw limited movement against the US Dollar (USD) on Tuesday as investors remained cautious ahead of President Donald Trump’s expected tariff announcement.

At the time of writing, the Pound US Dollar exchange rate (GBP/USD) was trading at around $1.2936, largely unchanged from Tuesday’s opening levels.

The US Dollar (USD) struggled for direction on Tuesday as investors weighed the potential impact of Trump’s planned tariffs on global trade.

The new measures are expected to target nations with large trade surpluses with the US and mirror the duties some countries impose on American goods.

Fears of retaliatory tariffs from key trading partners have unnerved markets, raising concerns that escalating trade tensions could disrupt global supply chains and slow economic growth.

While safe-haven demand for the US Dollar could increase, concerns that these policies may increase US recession risks appear to be capping USD’s upside.

Adding to these concerns, upcoming US data releases, including the ISM manufacturing PMI and JOLTs job openings, are expected to signal a cooling labour market and softer business activity.

The Pound (GBP) saw only modest gains on Tuesday, with investors optimistic that the UK could negotiate an exemption from Trump’s tariff measures.

Officials from both countries remain in discussions, and a recent conversation between Prime Minister Keir Starmer and President Trump was described as constructive.

Although a formal agreement may not be reached before the tariffs take effect on 2 April, the UK’s relatively small trade surplus with the US could reduce the risk of significant trade restrictions.

Looking ahead, aside from Trump’s tariff announcement, the GBP/USD exchange rate could also be influenced by the latest US ADP employment report on Wednesday.

If the data shows that job growth remained sluggish in March, it could weigh on the US Dollar, particularly as it may shape expectations for Friday’s non-farm payroll release.

Meanwhile, in the absence of key UK data, the Pound’s movement will likely be driven by global market sentiment and trade developments.

According to analysts at Scotiabank, GBPUSD short-term technicals are neutral in the short-term outlook.

“The moderation in momentum reflects the continued consolidation within a one-month range roughly bound between the mid- 1.28s and levels just above 1.30.

“Nearer-term price action offers support around 1.2880 and resistance just below 1.30.”

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NZD/USD price rose in latest intraday trading and tested the upper limit of a downward correctional price chanel that limited recent short-term trading, while bumping into the resistance of the 50-candle SMA, as the Stochastic reached overbought levels compared to the price’s movements, sending out early signals of a negative divergence, which would double negative pressure on the pair.

GBP/USD price edged lower in latest intraday trading after a session marked with sideways trading, amid ongoing negative pressure due to trading below the 50-candle SMA, while the price is hurt by piercing the main upward trend line in the short term, however, it’s countered by a stream of positive signals from the Stochastic, lending the price some positive momentum, which helped it stabilize against these negative pressures.

• The USD/JPY price analysis shows a rebound in the safe-haven yen.

• Data on Tuesday revealed poor business sentiment among Japanese manufacturers.

• The dollar drifted on Tuesday, ahead of the start of new tariffs.

The USD/JPY price analysis shows a rebound in the safe-haven yen as traders increasingly worry about the looming Trump tariffs. However, trading remained thin as the dollar drifted amid uncertainty over the upcoming tariffs. Meanwhile, data from Japan revealed poor business sentiment amid the escalating global trade war.

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The yen has benefitted greatly from the uncertainty that has come with Trump’s tariff campaigns. Its safe-haven nature has allowed it to gain when most other currencies have collapsed. However, Japan is not an island when it comes to trade. The ongoing global trade will have a negative impact on Japan’s export-reliant economy. As a result, recent gains in the yen have been short-lived. Traders are increasingly worried about the economy and what it will mean for BoJ rate hikes. 

Notably, data on Tuesday revealed poor business sentiment among Japanese manufacturers in the three months to March. This was an early sign that the global trade tensions will impact Japan. 

On the other hand, the dollar drifted on Tuesday, ahead of the start of new tariffs. Market participants remain uncertain about which countries will suffer the levies and its impact on their economies. At the same time, fears of stagnation in the US have dampened appetite for the US currency.

USD/JPY key events today

• ISM Manufacturing PMI
• JOLTS Job Openings

USD/JPY technical price analysis: Bears gear up for a new low

On the technical side, the USD/JPY price is bouncing lower after retesting the 30-SMA resistance and the recently broken channel line. The price has remained below the SMA with the RSI under 50, suggesting a bearish bias. 

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The price recently broke below its bullish channel support, indicating a surge in bullish momentum. However, before continuing lower, it rebounded to retest the recently broken level. From there, bears must return to make a lower low and confirm a new downtrend. 

If this happens, the price will reach lower support levels, including the 148.25 and 146.75. On the other hand, bulls will take back control if the price fails to make a lower low. In this case, USD/JPY would break above the 30-SMA and the 151.01 resistance to make a new high and continue the bullish trend.

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Created on April 01, 2025

• Currency experts predict that the euro/US dollar exchange rate may reach 1.09 during the key tariff week.
• Currently, the euro continues to attract buying interest during periods of weakness.
• Financial markets are generally tense ahead of the tariff announcements on April 2, but the euro is not showing this and is likely to make further gains in the coming days.
• According to licensed trading platforms, the EUR/USD price is stabilizing around 1.0805, and as expected, it will remain range-bound with its current downward bias until we react to important and influential events.

Caution Dominates Financial Markets

Dear reader, beware of the “sell the rumours and buy the facts” reaction, which could support the US dollar if the US stock market recovers, as investors believe we are reaching the limits of negative US tariff headlines. However, the tariff headlines have not helped the US dollar. Despite these potential reactions, it’s clear that the US dollar will face difficulties in 2025, as Trump’s tariffs and other policy announcements have proven ineffective for the US economy.

If this trend continues, a tough tariff announcement could test the EUR/USD pair and break the 1.09 level in the coming days. Sometimes, simplification is the best approach in times of uncertainty.

Trading Tips:

The EUR/USD will remain bearish until the reaction to the US jobs data releases and the reaction to Trump’s tariffs is over.

US Data vs. Tariffs

This important week, important US economic data may overshadow the tariff headlines. It’s an eventful week in the US, as we get clear indications of how resilient the economy is in light of Elon Musk’s DOGE cuts, policy volatility, and tariffs. Surveys are pointing to a sharp deterioration in sentiment, and we’ll be interested to see if this will impact other data.

If the answer is yes, the possibility of the US dollar declining and the EUR/USD pair rising to 1.09 and above becomes a real possibility. In fact, some analysts believe that the data will be more significant for the US dollar than the tariff news.

EUR/USD Technical Analysis Today:

After retreating from its recent highs, the EUR/USD pair found renewed demand last week, confirming strong buying interest during periods of weakness. Simply put, the EUR/USD exchange rate is in an upward trend, and we expect the recent resilience to continue as a result. For this simple reason, the 1.09 level will be present over the next five days. The EUR/USD pair is trading above its nine-day exponential moving average (EMA) at 1.0815, while momentum has rebounded, according to the Relative Strength Index (RSI), with the index pointing to a new high of 59. It is also above its 21-day EMA (1.0770), where last week’s heavy selling found strong support.

However, the situation could turn upside next Wednesday when Trump announces his “Liberation Day” tariffs, which are expected to see significant increases on EU imports. Commenting on this, some major investment bank analysts believe the decision could hinder global growth, hurt stock markets, and boost the dollar.

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April 1, 2025 – Written by Frank Davies

STORY LINK GBP/EUR Forecast Today: Pound Euro Ticks Up as German CPI Declines

The Pound to Euro exchange rate firmed on Monday after Germany released its latest inflation reading.

At the time of writing, the GBP/EUR was trading at around €1.1972, up roughly 0.2% from Monday’s opening levels.

Despite weakening against the Pound (GBP), the Euro (EUR) managed to hold steady and even strengthen against several of its peers on Monday following the release of Germany’s latest CPI data.

The figures showed that the headline inflation rate for March declined in line with market expectations, dropping from 2.3% to 2.2%.

Germany’s harmonised inflation rate, which is the European Central Bank’s (ECB) preferred measure, also fell, coming in at 2.3% – below the market forecast of 2.4% and down from the previous reading of 2.6%.

While the data increased expectations of an ECB interest rate cut, the Euro benefited from the day’s downbeat trading conditions, which bolstered its status as a safe-haven currency and kept it afloat.

At the start of the week, the Pound experienced some volatility, gaining strength against riskier currencies while maintaining a relatively steady position against others, despite a lack of major economic news from the UK.

Sterling’s performance was largely driven by the negative trading environment on Monday.

The Pound’s increasing sensitivity to risk allowed it to advance against its riskier peers, while it remained largely stable against safe-haven currencies.

With limited economic data from the UK, GBP exchange rates were predominantly influenced by broader market sentiment during most of Monday’s European trading session.

Looking ahead to Tuesday, the primary factor influencing the Pound Euro exchange rate will likely be the release of the Eurozone’s inflation data and its latest unemployment figures.

If the Eurozone’s CPI reading cools as expected, it could further pressure the Euro, especially if the data reinforces expectations of an ECB interest rate cut.

Additionally, the Eurozone will release its latest unemployment rate, which could provide some modest support to EUR exchange rates if it remains unchanged as expected.

For the Pound, the only significant data release on Tuesday will be the UK’s final manufacturing PMI data for March.

Should the index confirm a decline in the manufacturing sector for this month, GBP exchange rates could weaken following the release.

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TAGS: Pound Euro Forecasts

Created on April 01, 2025

• The British pound has gone back and forth during the trading session on Monday as we continue to see a lot of noisy behavior.
• The market is currently hanging around a range between the 1.30 level above and the 1.2880 level or so below.
• At this point, the market is trying to work off some of the excess froth, and that does make a certain amount of sense considering that we had rallied so hard to get here.

Now we have a lot of questions about tariffs and the recession in the United States if it shows up. And of course, the Bank of England remains very hawkish. So, this does help with the British pound strengthening. The question now is, can we finally break above the 1.30 level on a strong daily close? So far, we have not been able to do so. Therefore, I think we’re somewhat stuck in this range at the moment. Changing this will take a certain amount of momentum to reenter the markets.

On a Break Lower…

If we break down below the 1.2875 level, it’s possible that we could drop from there and go looking at the 1.2750 level where the 50-day EMA currently resides. That being said, I think you still have a market that overall is very bullish, and therefore you’re looking at pullbacks as potential opportunities. While the US dollar is a bit of a mixed bag, the one thing that’s been the case for some time now is that while other currencies were falling against the US dollar, the pound was at least somewhat resilient at times and definitely much stronger than a lot of other currencies. So, if we do see the US dollar get slammed again, it would make sense that the British pound is one of the main victors in that battle.

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