– Written by


Frank Davies

STORY LINK Pound to Dollar Forecast: GBP Faces Fragile Recovery Amid Gilt Yield Shock

The Pound to Dollar exchange rate (GBP/USD) is holding just above 3-week lows after rebounding to 1.34, but the outlook remains fragile as traders weigh UK bond-market turmoil, looming fiscal risks, and the next moves from the Federal Reserve.

UK gilt yields have eased slightly from 27-year highs, offering temporary relief, yet confidence in the government’s fiscal strategy is shaky ahead of November’s budget.

At the same time, US jobs data and Fed policy expectations keep the dollar outlook in sharp focus, leaving GBP/USD forecasts finely balanced between further weakness and a tentative recovery.

GBP/USD Forecasts: Can the UK Bond Market Stabilise?

After sliding to lows below 1.3350 on Tuesday, the Pound to Dollar (GBP/USD) exchange rate has managed to regain the 1.3400 level, but sentiment remains notably fragile with all eyes on the UK bond market as well as the dollar and wider global market pressures.

There has been some relief in the bond market with the 30-year yield back below 5.70%, although still close to 27-year highs.

UK equity markets have also managed to secure gains on Wednesday.

Bond markets will be watched very closely while the US labour-market data will also be a key influence this week.

UoB commented; “While the sharp drop appears excessive, there is room for GBP to weaken further to 1.3305, potentially testing the significant support level near 1.3270. This time around, to sustain the downward momentum, GBP must hold below 1.3490.

According to Scotiabank; “the latest price action is suggestive of support, stabilization, and possible recovery.

It added; “We see the potential for gains back toward the 50 day MA (1.3488) and look to a near-term range bound between 1.3350 support and 1.3450 resistance.”

National Australia Bank head of FX research Ray Attrill noted that bond-market pressures are global and not isolated within the UK.

He did, however, note UK vulnerability; “It’s probably resonating a bit more in the UK because of memories of the Liz Truss episode. I think part of the concern is that there’s an autumn statement or a budget that’s coming up.”

Attrill added; “I think at this stage, there’s a lack of confidence in markets that the government is willing to address effectively the scale of the budget deficit and the speed of debt buildup.”

Chancellor Reeves announced that the budget will be on November 26th.

MUFG noted that a record GBP14bn was raised in the latest 10-year Gilt syndication and added; “investors may be viewing these higher yields as attractive levels to buy.”

The bank is still cautious over the Pound outlook; “While we do not expect any crisis-type scenario in the UK, the risks from fiscal uncertainty will persist into the budget later in the year.”

Investment banks are still wary over the dollar outlook despite gains on Tuesday.

ING commented; “Rising debt concerns outside the US may have triggered some unwinding of abundant USD shorts. Still, we doubt this will provide sustainable support to the dollar ahead of key data releases and imminent Fed easing.”

Danske Bank sees limited scope for further near-term dollar selling; “Looking ahead, with roughly 90% probability priced for a 25bp Sept Fed cut, we see limited room for further downside in front-end US yields barring a major miss in Friday’s NFP report. Instead, we think risks remain tilted toward a hawkish market reaction in the weeks ahead, implying further scope for USD strength.”

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TAGS: Pound Dollar Forecasts

– Written by


Tim Boyer

STORY LINK Euro to Dollar Forecast: Can EUR/USD Test 1.18 on Fragile Dollar Outlook?

The Euro to Dollar exchange rate outlook (EUR/USD) brightened on Wednesday as the exchange rate surged above 1.1650 after US job openings slumped to a four-year low, fuelling forecasts of Fed rate cuts and fresh Dollar weakness.

With EUR/USD trading up to 1.1670, investors are eyeing a test of the 1.17 resistance zone as the Dollar’s fragile outlook dominates global forex markets.

EUR/USD Forecasts: Above 1.1650

The Euro to Dollar (EUR/USD) exchange rate found support above 1.1600 on Wednesday and rallied to near 1.1650 as the dollar failed to hold gains in global markets. The 1.17 region remains a key resistance area.

Following the latest US labour-market data, EUR/USD rallied further to 1.1670 as job openings dipped to the lowest level since 2021.

According to UoB; “We expect EUR to trade with a downward bias now, but it is too early to determine whether EUR can break clearly below the major support at 1.1570. The downward bias will remain intact as long as EUR holds below 1.1700.”

According to Scotiabank; “Broader turbulence in global bond markets looks to have moderated and the overall tone appears to be stabilizing, offer the EUR some support as participants shift their focus back to fundamentals and the outlook for relative central bank policy.”

It added; “We look to a near -term range bound between 1.1600 and 1.1700.”

According to the latest JOLTS data, job openings declined to 7.18mn for July from a revised 7.36mn previously which was below expectations of 7.38mn and the lowest reading since March 2021.

US Dollar Outlook: Fed Policy and Jobs Data in Focus

US labour-market data will continue to be watched very closely, especially given the impact on Fed policy and expectations surrounding interest rates

ING commented; “Jobs-related data now carries even greater weight after Fed Chair Jerome Powell’s de facto admission that employment risks have overtaken inflation concerns. Market attention may also sharpen on data beyond official payrolls, especially given potential credibility questions after Trump’s appointment of a new BLS chief.”

Scotiabank expects medium-term dollar losses; “We continue to think that the longer run outlook for the USD remains negative (weak fiscal policy, narrower growth and yield advantages, concerns over institutional resilience) but markets need new impetus to drive the dollar out of its current ranges.

The final Euro-Zone services-sector PMI index for August was revised slightly lower to 50.5 from the flash reading of 50.7.

Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank was cautious over the outlook; “Right now, the services sector feels more like stagflation than recovery.”

Markets will continue to monitor French fiscal policy and political drama ahead of next week’s scheduled Assembly confidence vote, especially given the climate on stresses in bond markets.

Fiscal fears are liable to stifle Euro support.

Berenberg commented; “If the French public and the country’s policymakers do not muster the will to change tack, markets will eventually force them to face reality by refusing to finance the gaping fiscal gap.

It added; “We expect France to still muddle through for a few more years with a somewhat elevated risk premium. However, the tail risk of a financial crisis is no longer negligible.”

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TAGS: Euro Dollar Forecasts

GBP/USD Surges Toward 1.3440 as Sterling Benefits from Strong UK Data and US Weakness

UK Macro Support Lifts GBP/USD (GBPUSD=X) From Lows

The GBP/USD (GBPUSD=X) pair bounced sharply from 1.3332 to 1.3442 after the UK Services PMI surged to 54.2 in August, its strongest reading since April 2024, beating July’s 51.8 and easing investor concerns over the government’s fiscal stability. Sterling’s rally coincided with a retreat in the US Dollar after the JOLTS job openings data revealed a sharper-than-expected fall to 7.181 million from 7.437 million in June. This labor market weakness amplified recession fears as tariffs weighed on hiring, while US factory orders contracted 1.3% month-on-month, marking the sixth consecutive monthly decline in manufacturing activity.

Bond Yields and Fiscal Concerns Shape Sterling’s Path

The rebound in GBP/USD came against a backdrop of surging UK gilt yields. Thirty-year yields briefly hit 5.695%, the highest in a quarter-century, underscoring growing investor anxiety over debt sustainability. Elevated yields raise borrowing costs, but the PMI data provided a counterweight by signaling resilient private-sector demand. The Bank of England remained cautious, with Governor Bailey emphasizing anchored inflation expectations while warning of downside job risks. BoE Governor Taylor stressed the need to keep policy restrictive until inflation sustainably returns to 2%, highlighting that the easing cycle may proceed more slowly than markets expect.

US Dollar Index and Fed Rate Cut Expectations

The US Dollar Index (DXY) hovered around 98.40, with safe-haven demand keeping it supported even as rate cut odds surged. Markets now price a 91% probability of a 25-basis-point Fed cut in September, up from 85% the prior week, with August Nonfarm Payrolls expected to deliver just 75,000 jobs and unemployment projected at 4.3%. If realized, this would add to pressure on the Fed to pivot, weighing further on the greenback and providing scope for GBP/USD to extend gains toward key resistance zones.

Technical Landscape for GBP/USD

Sterling’s rebound has positioned GBP/USD close to the 100-day SMA at 1.3450, with the 20-day and 50-day SMAs aligned around 1.3483–1.3484. A breakout above 1.3489 could unlock a move toward the 1.3500 handle, though failure to hold above 1.3400 risks exposing the 1.3330 support once again. The RSI sits in neutral territory around 42, showing limited buying pressure, but price action indicates near-term momentum has shifted in favor of the bulls.

Relative Performance Against Other Majors

Sterling’s weekly performance shows it as the strongest against the Japanese yen, with a 0.18% gain, while it has slipped against the US Dollar and euro. The GBP/USD pair’s recovery toward 1.3440 contrasts with ongoing weakness in gilt markets, where borrowing costs continue to challenge fiscal credibility. Against the euro, GBP eased 0.23%, while it lost 0.42% versus the Australian dollar, showing that sterling’s resilience is concentrated in the dollar cross.

Investor Sentiment and Risk Outlook

Despite the recovery, the broader outlook for GBP/USD remains fragile. Investors remain concerned about the UK’s fiscal path as bond yields linger near multi-decade highs. Across the Atlantic, weakness in US jobs data is fueling rate cut bets, but the dollar’s safe-haven bid remains firm amid global trade disputes and uncertainty surrounding tariffs. Traders are positioning for heightened volatility ahead of the Bank of England’s policy testimony and the upcoming US Nonfarm Payrolls report, both of which will dictate whether the pair sustains momentum above 1.3440 or resumes its slide toward 1.3300.

That’s TradingNEWS

USD/JPY Holds Near 149.00 as Traders Brace for US Jobs Data and Japan’s Political Strain

The USD/JPY pair is locked in heavy volatility around the 148.70–149.00 zone, a region that has repeatedly capped rallies this summer. Wednesday’s session saw the exchange rate climb to 149.14 before paring gains, leaving traders preparing for decisive moves around the upcoming U.S. Nonfarm Payrolls report and shifting Japanese political dynamics. The dollar has held firm despite softer Treasury moves, supported by speculation that the Federal Reserve may keep rates elevated longer, while the yen remains under pressure from surging JGB yields and government uncertainty.

Fed Policy Expectations Anchor Dollar Moves Against JPY

Markets continue to price in a 91% chance of a Fed rate cut in September, yet the pace of easing remains contested. CME FedWatch futures still point to 55 basis points of cuts by year-end, but a stronger labor market print could force repricing closer to 25–50 bps. July’s JOLTS report already showed job openings falling to 7.18 million from 7.44 million, underscoring slowing demand for labor, but Friday’s NFP is forecast to show only 75,000 new jobs with unemployment climbing to 4.3%. A weaker reading would validate dovish expectations and weigh on USD/JPY, while resilience in job creation could push the dollar higher and revive the case for policy patience.

Japan’s Political Tensions Deepen Yen’s Vulnerability

On the yen side, domestic factors are adding weight. Reports of the Secretary General of the ruling party preparing to resign have stoked uncertainty around Prime Minister Shigeru Ishiba’s leadership, raising fears of a destabilized policy front. Long-term JGB yields surged to 3.29%, the highest in decades, reflecting market concerns about fiscal sustainability. Yet despite higher yields, the yen continues to weaken, suggesting global investors still prefer carry trades against the Japanese currency as the BoJ maintains ultra-loose policy. Without a clear commitment from the BoJ to tighten further, political instability compounds yen weakness, leaving USD/JPY tilted toward the upside in the near term.

Technical Levels Define USD/JPY Range Before Breakout

Technically, USD/JPY has been locked in a tight one-month range, with resistance at 148.70–148.95 and support anchored near 146.20–146.60. A sustained close above 148.95 would target 150.30 and 150.92, with a break there exposing the March high at 151.31 and longer extensions toward 151.60. On the downside, failure to defend 147.10 risks a slide back to 146.22, the August low. Momentum indicators show mixed signals: the RSI is hovering in overbought territory near 70, reinforcing the need for a corrective pullback, while both the 50-day SMA at 147.15 and 200-day SMA at 147.70 slope positively, maintaining a bullish medium-term structure. Traders are watching for whether NFP or political shocks provide the catalyst for a clean breakout.

Investor Sentiment and Carry Trades Sustain Dollar Advantage

Carry trade dynamics remain in favor of the dollar, with U.S. yields still comfortably above Japan’s near-zero policy rates. The widening yield gap, combined with expectations that the Fed will be slower to cut than previously thought, continues to underpin USD/JPY demand at dips. Speculative positioning shows hedge funds maintaining net long exposure to the pair, while retail traders remain net short, a contrarian indicator that often supports further upside. However, intraday volatility is expected to spike around job reports and wage data, requiring disciplined risk management.

Key Catalysts Ahead for USD/JPY

The remainder of the week holds multiple triggers: U.S. ADP private payrolls, ISM Services PMI, and Jobless Claims precede Friday’s Nonfarm Payrolls. Japan will release wage growth data, which, if stronger than expected, could temper yen weakness by reviving hopes of gradual BoJ tightening. Until then, USD/JPY is likely to trade within the 147.00–149.50 band, with any breakout dictating the September trend. Political instability in Tokyo adds another unpredictable layer that could exacerbate yen volatility if Ishiba faces mounting calls to step down.

That’s TradingNEWS

• The USD/JPY forecast indicates continued yen weakness amid political uncertainty in Japan.

• The Secretary General of Japan’s ruling party is planning to resign.

• Economists are predicting a low US job growth of 75,000. 

The USD/JPY forecast indicates continued yen weakness amid political uncertainty in Japan. Meanwhile, the dollar is on the front foot as market participants prepare for Friday’s crucial US employment report. 

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The yen slid on Tuesday after reports that the Secretary General of Japan’s ruling party was planning to resign. Hiroshi Moriyama is a close ally of Prime Minister Shigeru Ishiba. Therefore, such a move will likely further weaken Ishiba’s position. Since he lost the election, there have been calls for Ishiba to resign. His resignation would create uncertainty in Japan’s politics that could further weaken the yen.

“On the surface, political uncertainty and the possibility that Prime Minister Shigeru Ishiba could resign in the coming days or weeks is having a debilitating impact on the yen,” said Kit Juckes, Societe Generale’s chief global FX strategist.

Meanwhile, the dollar gained amid yen weakness as traders awaited the next major catalysts from the US. Friday’s nonfarm payrolls report could show further weakness in the labor market. Economists are predicting a low job growth of 75,000 and a higher unemployment rate of 4.3%. Unexpected softness would increase expectations for Fed rate cuts this year, weighing on the dollar. On the other hand, resilience in the labor market could ease rate cut expectations, boosting the greenback.

USD/JPY key events today

USD/JPY technical forecast: Bulls face the 148.75 range resistance

On the technical side, the USD/JPY price has rallied to challenge the 148.75 key resistance level. It trades well above the 30-SMA, with the RSI near the overbought region, suggesting a bullish bias. However, the price still trades within its consolidation area, with support at the 146.50 level and resistance at the 148.75 level. 

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If bulls manage to break out of the consolidation area, the price will rally to retest the 150.70 resistance level. At the same time, it could initiate a bullish trend characterized by higher highs and higher lows. On the other hand, if the level holds firm, the price will likely drop to retest the range support. This means it could remain in consolidation for an extended period. 

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USD/JPY Technical Analysis

The US dollar initially rallied a bit during the trading session on Wednesday against the Japanese yen breaking above the 148.50 yen level, but gave back a bit of the gains. At this point, I’m still bullish about this pair, but I recognize it’s going to be difficult for it to truly take off to the upside before we get those important jobs numbers. A short-term pullback from here makes quite a bit of sense, but really, I think we would just stay in the same consolidation that we had been in previously. If we can break out to the upside, the 151 yen level becomes the target.

AUD/USD Technical Analysis

The Australian dollar initially pulled back just a little bit during the trading session here on Wednesday to test the 50 day EMA and then rallied again. I think again, this is a situation where we’re not necessarily going to see the US dollar fall apart. I think what we’ve got is a market that’s somewhat locked up. It really doesn’t know what to do. And you could probably say that going all the way back to the end of April. It’s just been a grind in the Australian dollar, and I don’t see why today that would change. I do favor the downside at the moment, but I would need to see exhaustion in order to get involved.

If we were to break above the 0.6650 level, then it would be a fresh new high. You would assume that the Aussie would rally. That would have to be accompanied by US dollar weakness around the world though. As things stand, this has been one of the worst performers against the dollar over the last several months. So, if the US dollar suddenly overwhelms everything, one would extrapolate that the Aussie should fall.

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

• EUR/JPY may find its primary barrier at 173.90, the highest since July 2024.
• Bullish bias strengthens as the 14-day Relative Strength Index remains above the 50 mark.
• The initial support lies at nine-day EMA of 172.31.

EUR/JPY continues its winning streak for the fifth successive session, trading around 173.20 during the European hours on Wednesday. The technical analysis of the daily chart suggests the prevailing bullish market bias as the currency cross is remaining within the ascending channel pattern.

The 14-day Relative Strength Index (RSI) is positioned above the 50 mark, strengthening the bullish bias. Additionally, the short-term price momentum is stronger as the EUR/JPY cross remains above the nine-day Exponential Moving Average (EMA).

On the upside, the EUR/JPY cross may approach the 173.90, the highest since July 2024, recorded on July 28, 2025, aligned with the upper boundary of the ascending channel around the psychological level of 174.00.

The EUR/JPY cross may find its primary support at the nine-day EMA of 172.31. A break below this level could weaken the short-term price momentum and prompt the currency cross to test the ascending channel’s lower boundary around 171.40, followed by the 50-day EMA of 170.93.

Further declines below the confluence support zone would weaken the medium-term price momentum and put downward pressure on the EUR/JPY cross to navigate the region around the nine-week low at 169.72, which was recorded on July 31.

EUR/JPY: Daily Chart

• GBP/USD recovers above 1.3400 after dropping to its weakest level in nearly a month.
• Long-dated UK gilt yields remain near multi-decade highs.
• Key resistance area for GBP/USD aligns at 1.3440-1.3460.

After falling more than 1% and registering its biggest one-day loss since April on Tuesday, GBP/USD touched its lowest level since early August at 1.3333 in the Asian session on Wednesday. Although the pair recovered above 1.3400 in the European trading hours, investors could refrain from betting on an extended rebound.

Growing concerns over the global fiscal health lifted borrowing costs of long-dated government bonds of major economies on Tuesday, opening the door for a flight to safety. Following Tuesday’s sharp increase, the yield on the 30-year UK gilt touched its highest level since 1998 at 5.75% early Wednesday before retreating. In turn, Pound Sterling found support and managed to erase its daily losses.

Reporting on the matter, “in Britain, Prime Minister Keir Starmer’s reshuffle of his top team of advisers on Monday renewed focus on fiscal challenges given the UK’s high levels of borrowing and slow growth,” Reuters reported. “A budget is due later in the year, prompting weeks of speculation about tax rises that could dampen the economy.”

In the second half of the day, the US Bureau of Labor Statistics will release the JOLTS Job Openings data for July. Markets expect the number of job openings to decline slightly to 7.4 million. A noticeable increase, with a print above 7.7 million, could boost the USD and weigh on GBP/USD. On the flip side, a disappointing reading close to 7 million is likely to have the opposite impact on the pair’s action. Nevertheless, investors could remain reluctant to bet on a steady recovery in Pound Sterling unless there is a sharp downward correction in long-dated gilt yields.

GBP/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart stays near 40 and GBP/USD continues to trade well below the 200-period Simple Moving Average (SMA), suggesting that the bearish bias remains intact despite the latest recovery attempt.

On the upside, GBP/USD faces a critical resistance area at 1.3440-1.3460, where the 200-period SMA, Fibonacci 50% retracement of the latest downtrend and the 100-day SMA are located. While this resistance area stays intact, buyers are likely to remain on the sidelines. On the downside, 1.3330 (static level) could be seen as the next support level before 1.3300 (Fibonacci 23.6% retracement).

If GBP/USD manages to clear 1.3440-1.3460, next resistance levels could be spotted at 1.3490-1.3500 (round level, 100-period SMA) and 1.3535 (Fibonacci 61.8% retracement).

Created on September 03, 2025

• The US dollar has rallied quite nicely against the Japanese yen in early trading on Tuesday as we are testing the crucial 148.5 yen level an area that has been a bit of a barrier for some time now.
• Ultimately, this is a market that if we can break above here, we could go looking to the 151 yen level but I think it’s going to be a bit difficult to do it all in one shot, mainly due to the fact that we do get the employment numbers later in the week on Friday, and that will obviously have a major influence on what happens next with the US dollar and risk appetite in general.
• It’s worth noting that we have broken above the 200-day EMA as well, so that’s a good sign, but both moving averages, the 50-day EMA and the 200-day EMA, are flat at the moment. So that doesn’t necessarily suggest that we are in any type of trend.

Choppy Week Ahead?

I anticipate that most of this week will probably be choppy and somewhat sideways as we wait for that important jobs figure. The real question at this point in time is will the interest rate differential continue to favor the US dollar over the longer term, which I think it will. And that does give a little bit of credence to the idea of a positive currency pair here.

Whether or not we can really come to grips with that between now and the jobs number is a completely different situation. But I think you’ve got a scenario where traders will have to watch this.

Maybe more of a buy on the dip mentality is the way to go. That’s the way I’ve been playing this pair for a couple of weeks now. After that nasty sell-off, and then we just went sideways. Sometimes it’s all about where a pair won’t go.

And at this point, it doesn’t look like it wants to go lower. So, I remain bullish, but I also keep my expectations a little tempered over the next couple of days.

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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.