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GBP/USD Forecast: Sterling Advances Beyond 20-Day EMA as US-Iran Talks Progress

The British pound has strengthened against the US dollar, with the GBP/USD pair moving decisively beyond the 20-day exponential moving average (EMA) amid reports of a potential US-Iran diplomatic agreement. The development has injected fresh optimism into currency markets, particularly for risk-sensitive pairs like cable.

US-Iran Deal Talks Boost Risk Appetite

Reports emerging from diplomatic channels indicate that the United States and Iran are nearing a framework agreement on nuclear and regional security issues. While details remain unconfirmed, market participants have interpreted the progress as a positive step toward de-escalation in the Middle East, reducing geopolitical risk premiums that have weighed on the dollar in recent sessions.

The potential deal has triggered a shift in sentiment, with traders reducing safe-haven allocations to the greenback. This has provided a tailwind for the pound, which had been trading in a narrow range below the 20-day EMA for much of the past week.

Technical Outlook: Key Levels to Watch

The break above the 20-day EMA, currently near 1.2650, signals a short-term bullish shift in momentum. The pair is now testing resistance around the 1.2700 psychological level, a zone that has capped upside attempts in recent weeks.

If the pound sustains its advance, the next key target lies at the 50-day EMA near 1.2780. A decisive close above this level would open the door to the 1.2850 region, where the 100-day EMA converges with prior price congestion.

On the downside, the 20-day EMA now serves as initial support, with a break below exposing the 1.2600 handle and the recent swing low near 1.2550.

Market Implications for Traders

The GBP/USD move reflects a broader recalibration of currency markets as geopolitical risks recede. For traders, the key question is whether the US-Iran developments represent a sustainable catalyst or a temporary reprieve. The dollar’s trajectory will also depend on upcoming US economic data, including non-farm payrolls and inflation figures, which could reinforce or reverse the current trend.

The pound’s outlook remains tied to Bank of England policy expectations. With UK inflation still above target, markets are pricing in a slower pace of rate cuts relative to the Federal Reserve, which has provided underlying support for sterling.

Conclusion

The GBP/USD pair’s advance beyond the 20-day EMA is a technically significant move, supported by improving sentiment around US-Iran diplomatic efforts. While the short-term bias has turned bullish, traders should watch for confirmation at key resistance levels and remain attentive to evolving geopolitical and economic data. The next few sessions will be critical in determining whether this breakout has lasting momentum.

FAQs

Q1: What is the 20-day EMA and why is it important for GBP/USD?
The 20-day exponential moving average is a short-term technical indicator that smooths price data to identify trend direction. A move above it often signals bullish momentum and is closely watched by forex traders for entry and exit signals.

Q2: How does a US-Iran deal affect the GBP/USD exchange rate?
A US-Iran agreement can reduce geopolitical risk, which tends to weaken the safe-haven US dollar and boost risk-sensitive currencies like the British pound. Improved sentiment and reduced uncertainty often lead to capital flows away from the dollar.

Q3: What are the key resistance and support levels for GBP/USD?
Key resistance is at 1.2700 (psychological level) and 1.2780 (50-day EMA). Key support is at 1.2650 (20-day EMA) and 1.2600 (round number), with a break below exposing the 1.2550 swing low.

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USD/JPY

The US dollar initially pulled back just a touch during the trading session here on Monday but turned around to show signs of life. The 160-yen level is an area that I think a lot of people will be watching very closely, as it’s a large psychologically significant level, but it’s also the beginning of significant resistance, I think that runs to about the 160.60-yen level.

If we can break above there, then it’s likely that the market goes even higher, as it is a smashing of the 1990 swing high. If we do fall from here, then I think there’s plenty of support near the 50-day EMA. So, I look at this as a buy on the dip type of market.

Interest Rate Differentials and Long-Term Targets

With that being said, I’m paying close attention to the 10-year yield. It did drop a little bit during the session, hinging on the idea of peace breaking out in the Middle East. It’s really not a new peace deal, I think we’re talking about, I think it is a situation where we are looking at a longer-term ceasefire. Who knows what it really turns into, and I would also point out that, unfortunately, the demands and the little bits that are being released by the Iranians now suggest things that I’d be really surprised if the Americans went along with.

Regardless, the interest rate differential in this pair continues to favor the US dollar, and I do think that we will eventually break out, kicking off a longer-term buy-and-hold type of market. The measured move from the rounding bottom that started in 1990 is 224-yen.

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Christopher Lewis is a technical analyst and market commentator at DailyForex with more than two decades of trading experience in Forex and other leveraged markets. Based in Columbus, Ohio, he specializes in chart-based analysis of major currency pairs, stock indices, commodities, and energy markets, focusing on clear support and resistance levels, trend structure, and risk management. Christopher produces daily written and video analysis for traders who rely on technical setups to navigate volatile market conditions

As seen on: Pairs Of Aces Podcast,The Trader Guy, FXEmpire

EUR/USD Analysis Summary Today

• Overall Trend: Bearish in the medium term with short-term rebound attempts.

• Support Levels for EUR/USD Today: 1.1525 – 1.1470 – 1.1400

• Resistance Levels for EUR/USD Today: 1.1640 – 1.1700 – 1.1770

EUR/USD Trading Signals:

• Buy scenario: From the support level of 1.1480 with a target of 1.1650 and a stop-loss at 1.1400

• Sell scenario: From the resistance level of 1.1670 with a target of 1.1480 and a stop-loss at 1.1760

Technical Analysis of EUR/USD Today

Technically, the EUR/USD currency pair continues to move near important resistance levels following a strong bearish wave over the past few weeks. The current performance reflects a state of hesitation among traders amid an absence of strong catalysts to push the price to break through new levels.

According to top trading platforms, the currency pair stabilized near the 1.1600 resistance level. Currently, short-term indicators show bullish rebound attempts, but the general trend still leans downward. However, continued trading below key resistances could prompt some profit-taking and a bearish correction before resuming the main trend.

The Bullish Scenario

If buyers succeed in pushing prices above the 1.1600 resistance, the rally could extend towards 1.1650 and then 1.1700, with a clear improvement in positive momentum.

The Bearish Scenario

If the US dollar strengthens or the Federal Reserve issues hawkish statements, the pair could decline towards the 1.1500 support level, followed by 1.1450 and then 1.1380.

Currently, the technical indicators remain bearish. The most prominent indicators on the daily timeframe are the 14-day RSI, the MACD, and the moving averages. Breaking the 1.1700 resistance level is crucial for a shift to a bullish trend in the near term. The EUR/USD pair will be affected today by new comments from European Central Bank (ECB) President Christine Lagarde at 10:15 AM Egypt time. This will be followed by the release of industrial production figures for the Eurozone and the United States. It’s worth noting that the ECB raised interest rates by 25 basis points, which provided temporary support to the euro.

At that time, the Euro found initial support from this move, as policymakers indicated that monetary policy tightening remains firmly on the table, boosting expectations for a potential rate hike again in July.

Factors Affecting the Pair’s Movement Today

The EUR/USD pair’s movements today will be influenced by several key factors, most notably:

• Statements from ECB policymakers.

• Economic data from the Eurozone and the United States.

• US dollar movements related to interest rate expectations.

• Continued geopolitical uncertainty in global markets.

Trading Advice:

It is recommended that traders monitor price action at the 1.1600 and 1.1700 resistance levels, while maintaining strict risk management given the ongoing market uncertainty.

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check out.

Mahmoud has been working fulltime in the Foreign Exchange markets for 12 years. Offers his analysis, articles and recommendations at the most renewed Arabic websites specialized in the global financial markets, and his experience gained a lot of interest among Arab traders. Works on providing technical analysis, market news, free signals and more with follow up for at least 12 hours a day, and aims to simplify forex trading and the concept of trading for his audience.

As seen on: mahmoud.a@dailyforex.com

The pair continues to remain positioned within a positive trend so far, supported by the formation of the 213.50 level as the first key support. This has led to renewed attempts to reach the resistance near 215.50, in an effort to find a breakout path to resume the upward movement in the short to medium term trading.

Based on the above, we will remain waiting for the price to achieve the required breakout, which would increase the likelihood of targeting 216.10 and 216.65 initially. With continued positive factors, the movement could extend toward 217.50, which represents the first main target of the upward trend.

The expected trading range for today is between 214.00 and 216.10

Trend forecast: Bullish

The EUR/GBP exchange rate has moved sideways in the past few days as traders focus on the upcoming European Central Bank (ECB) and Bank of England (BoE) interest rate decisions. It was trading at 0.8627, down from last year’s high of 0.8865. It has formed two major chart patterns, pointing to more downside.

The daily chart shows that the EUR to GBP exchange rate has pulled back in the past few months. It has retreated from a high of 0.8865 in November last year to 0.8628. 

A closer look shows that the pair has found substantial support at 0.8615, its lowest level on February 5,  March 19, and May 25. This support is part of the descending triangle pattern, whose upper side connects the highest swings in November last year and February and May this year. The descending triangle is a common continuation sign in technical analysis

The pair has also formed a small head-and-shoulders pattern, a common bearish sign. Also, it also remained below the 50-day and 200-day Weighted Moving Averages (WMA).

Therefore, the pair will likely have a strong bearish breakout in the near term, potentially to the key support at 0.8545, the 50% Fibonacci Retracement level. 

EUR/USD chart | Source: TradingView

The EUR/GBP pair has come under pressure in the past few days as investors waited for the upcoming ECB interest rate decision. Economists polled by Reuters expect Christine Lagarde and her team to deliver the first interest rate hike of the year. 

If this happens, the bank will hike rates by 0.25% to 2.40% and the deposit facility rate to 2.25%. It will be the first time that the bank has hiked interest rates since September 2023. Also, it will be a big reversal after the bank delivered several interest rate cuts last year.

The bank’s rate hike will come as it combats the elevated inflation, which has continued rising in the past few months. Data shows that the headline CPI rose to 3.2% in May from 3.0% in the previous month. It has jumped sharply from the year-to-date low of 1.7%. Anal

The next key catalyst for the EUR/USD pair will be the upcoming Bank of England interest rate decision scheduled for Thursday. Economists expect the bank to leave interest rates unchanged in its meeting next week.

The most recent data showed that the headline Consumer Price Index retreated to 2.8% in April, helped by the ongoing government actions. Still, Polymarket traders are predicting that the bank will hike interest rates in the coming months as inflation ticks up again. 

The New Zealand dollar has jumped to kick off the trading week on Monday, touching the 200-day EMA, but interestingly enough, we see the Kiwi dollar roll right back over again. By doing so, this is a market that is showing you there’s real concern out there right now, as the peace agreement between the Iranians and the Americans, quite frankly, the more details that are released by each country, the less likely it looks, I think, to many people to be signed. That being said, we are in a consolidation area right now with the 0.58 level being the beginning of significant support and the 200-day EMA above being resistance.

USD/CAD Technical Analysis

The pair continues to remain positioned within a positive trend so far, supported by the formation of the 213.50 level as the first key support. This has led to renewed attempts to reach the resistance near 215.50, in an effort to find a breakout path to resume the upward movement in the short to medium term trading.

Based on the above, we will remain waiting for the price to achieve the required breakout, which would increase the likelihood of targeting 216.10 and 216.65 initially. With continued positive factors, the movement could extend toward 217.50, which represents the first main target of the upward trend.

The expected trading range for today is between 214.00 and 216.10

Trend forecast: Bullish

The Pound to Dollar (GBP/USD) exchange rate opened the new trading week higher after the US and Iran reportedly agreed to end their nearly four-month conflict, boosting risk appetite and reducing demand for the safe-haven US Dollar

At the time of writing, GBP/USD was trading around $1.34, up approximately 0.3% on he market open

DAILY RECAP:

The US Dollar (USD) began the week on the defensive after renewed optimism surrounding US-Iran negotiations reduced demand for safe-haven assets.

Investors reacted positively to comments from US President Donald Trump suggesting that discussions with Tehran were in their “final throes” and that a comprehensive agreement could be reached within days.

This optimism helped improve market sentiment and weighed on the US Dollar through the opening part of the week.

The Greenback remained subdued following the latest US inflation figures, as consumer price growth accelerated broadly in line with expectations and failed to materially alter expectations for Federal Reserve policy.

However, sentiment shifted later in the week as tensions in the Middle East escalated once again.

Fresh exchanges between US and Iranian forces prompted investors to return to defensive positions, helping the US Dollar recover some lost ground.

These gains proved temporary, however, after reports emerged that additional planned US military action had been cancelled and that progress towards a broader diplomatic agreement remained intact.

As a result, the US Dollar ended the week under renewed pressure.

Meanwhile, the Pound (GBP) enjoyed support through much of the week as improving market sentiment and easing UK gilt yields helped underpin Sterling.

Lower borrowing costs provided reassurance to investors after recent volatility in the UK bond market.

However, Sterling’s advance was interrupted by renewed political uncertainty following the surprise resignation of Defence Secretary John Healey, which revived scrutiny of Prime Minister Keir Starmer’s leadership and broader political stability.

The Pound also faced pressure after April’s GDP report showed the UK economy contracted by 0.1%, reinforcing concerns about slowing growth momentum.

Despite these setbacks, Sterling still managed to outperform the US Dollar over the week as geopolitical developments remained the dominant market driver.

Near-Term GBP/USD Forecast: Central Banks and Makerfield By-Election in Focus

The coming week could prove pivotal for the Pound to Dollar exchange rate as investors digest policy decisions from both the Federal Reserve and the Bank of England.

Both central banks are expected to leave interest rates unchanged, placing the emphasis firmly on their guidance for future policy.

Recent US inflation and labour market data may encourage a relatively hawkish tone from Federal Reserve officials, potentially supporting the US Dollar.

Meanwhile, softer UK economic data could encourage a more cautious approach from the Bank of England, limiting support for Sterling.

Investors will also closely monitor developments surrounding the Makerfield by-election, which is expected to attract considerable political attention.

Combined with central bank decisions and ongoing developments in the Middle East, these factors could contribute to heightened volatility in GBP/USD through the week ahead.

Japanese rates would still not be high relative to U.S. rates if the BOJ raised its interest rate to 1%. But this would indicate a shift from ultra-low rates in Japan. It would also demonstrate the BOJ’s shift of focus towards inflation pressures from energy, import prices and the weak yen.

This could have two advantages for the yen. First, from the viewpoint of borrowers, higher rates make it less attractive to borrow yen and buy higher-yielding assets. Second, a hawkish BOJ may soften the mood of traders to keep large short-yen bets close to the 160 level.

BOJ Guidance and Yen Intervention Risk Become Key Near 160

The weak yen is also a political and economic issue in Japan. This increases the import prices and maintains inflationary pressures. This is one reason why BOJ may continue to hike rates. This is also why markets stay on alert to the risk of intervention when USDJPY approaches 160.

The Fed story is also important. The US dollar remains supported as the Fed expects to maintain rates during its next meeting. The dollar still has a solid interest rate advantage from sticky inflation, solid jobs data and a US Treasury yield that remains high. The USDJPY may not be able to extend its declines unless the U.S. yields decline or the BOJ signals a quicker tightening.

However, the balance of risk is changing. The primary focus of the story earlier was rates in the United States. Now, the market has to factor in the inflation problem in Japan and BOJ’s response. The BOJ may not be satisfied with 1% as the rate of producer prices rises further in Japan.

This makes USDJPY more sensitive towards BOJ guidance. Traders will watch Deputy Governor Shinichi Uchida’s comments to see whether he signals a slowdown or a faster pace of tightening.

USDJPY Forecast: 160–162 Breakout Could Open Path Toward 175

The long-term picture for USDJPY remains strongly bullish, as the pair trades within the ascending channel pattern. This bullish structure points to weakness in the yen, which is taking the pair toward the key pivotal level of 160 to 162.

On the downside, the pair has been supported above the 140 level. Each time the pair hits the 140 level, it produces a strong rebound. The rebounds in December 2023, September 2024, and April 2025 have all produced strong rallies to push the pair higher.