The Pound-to-Euro exchange rate (GBP/EUR) has maintained highs at around 1.156 on Wednesday, after the single currency lost further ground in global markets, which has helped underpin the Pound.

The Euro attempted to stabilise during the European trading with GBP/EUR trading around 1.1535.

According to SocGen: “If a short-term pullback develops, the lower limit of an ascending channel near 0.8660/0.8645 could be an important support zone.

This would imply GBP/EUR resistance in the 1.1550 – 1.1570 zone.

ING considers that there has been substantial position adjustment; “it could be seen as the UK having a better deal than the EU when it comes to trade. In reality, however, it was probably all to do with positioning, where opposing fiscal and monetary prospects between the eurozone and the UK had made long EUR/GBP one of the conviction trades this summer.”

Although there was immediate relief that the EU secured a trade deal with the US and avoided a trade war, there have also been notable concerns that the EU will be negatively impacted by the arrangement.

National Australia Bank head of FX research Ray Attrill commented; “It hasn’t taken long for markets to conclude that this relatively good news is still, in absolute terms, bad news as far as the near-term implications for euro zone growth are concerned.”

He added; “The deal has been roundly condemned by France while others – including German Chancellor Merz – are playing up the negative consequences for exporters, and with that, economic growth.”

According to Clemens Fuest, president of the IFO economic research institute; ‘The trade deal is a humiliation for the EU, but it reflects the imbalance of power.”

He added; “The Europeans need to wake up, focus more on economic strength and reduce their military and technological dependence on the US.”

Rabobank noted a newswire report; “According to Bloomberg, Wolfgang Niedermark of the BDI industry federation has wailed that “the EU is accepting painful tariffs. Even a 15% tariff will have immense negative consequences for Germany’s export-oriented industry.”

The bank added; “Prior to Trump’s inauguration, economists were talking about “worst case scenarios” that included horrific outcomes like a 5% universal tariff, and 15% on Chinese goods. After witnessing 145% tariffs on China and Liberation Day “reciprocal tariffs,” it’s easy to shrug off the current developments. But the actual tariff levels still matter.”

There is, therefore, a risk of wider complacency over the impacts on the US and global economy.

Domestically, mortgage approvals increased to 64,200 for June from a revised 63,300 the previous month and above consensus forecasts of 63,000.

Approvals for re-mortgaging increased to the highest level since October 2022.

There was also a surge in net lending to £6.76bn for June from £2.90bn the previous month with a stronger increase in consumer credit growth.

The British Retail Consortium (BRC) reported that shop prices increased 0.7% in the year to July from 0.4% previously.

Food prices increased 4.0% from 3.4% previously.

Mike Watkins, Head of Retailer and Business Insight, NIQ, commented; “Consumers’ household budgets are coming under pressure with the food retailers now seeing price increases above CPI.”

The data should not encourage a faster rate of interest rate cuts by the Bank of England.

Important DisclaimersThe content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party’s services, and does not assume responsibility for your use of any such third party’s website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.Risk DisclaimersThis website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.

• GBP/USD trades in positive territory above 1.3350 on Wednesday.
• Markets await key data releases from the US and Fed policy announcements.
• The near-term technical outlook is yet to point to a buildup of recovery momentum.

After touching its lowest level since mid-May near 1.3300 on Tuesday, GBP/USD stages a correction and trades above 1.3350 in the European session on Wednesday. High-tier macroeconomic data releases from the US and the Federal Reserve’s monetary policy announcements could trigger the next big action in the pair.

Mixed macroeconomic data releases from the US limited the US Dollar’s gains on Tuesday and helped GBP/USD hold its ground. Additionally, investors seem to be stepping aside before committing to additional USD longs. JOLTS Job Openings declined to 7.43 million in June from 7.77 in May, falling short of the market expectation of 7.55, while the Conference Board’s Consumer Confidence Index improved to 97.2 in July from 95.2 in June.

The US economic calendar will offer ADP Employment Change data for July and the first estimate of the second-quarter Gross Domestic Product (GDP) growth on Wednesday. Markets expect private sector payrolls to rise by 78,000 following the 33,000 decline reported in June. A significant positive surprise, with a reading above 100,000, could boost the USD with the immediate reaction.

The US’ GDP is forecast to rebound and grew at an annual rate of 2.4% following the 0.5% contraction recorded in the first quarter. A reading near the market consensus, if combined with an upbeat ADP print, could help the USD gather strength heading into the Fed event. Conversely, GBP/USD could keep its footing if these data miss analysts’ estimates.

Later in the day, the Fed is widely anticipated to leave the policy rate unchanged at the range of 4.25%-4.5%. Earlier in the month, Governors Christopher Waller and Michelle Bowman both voiced their support for a 25 basis points rate cut in July. Hence, it wouldn’t be a big surprise if they were to vote in favor of a reduction in the policy rate. However, if the policy statement shows that there were other policymakers who voted for a rate cut, the USD could come under selling pressure in the late American session.

On the other hand, GBP/USD could turn south if Fed Chairman Jerome Powell avoids signalling a rate cut in September and repeats the need for patience, citing the uncertainty surrounding the inflation outlook despite the recently-announced trade deals with Japan and the EU. According to the CME FedWatch Tool, markets are currently pricing in about a 63% probability of a rate cut at the next meeting in September.

GBP/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart stays below 40 and GBP/USD is yet to make a 4-hour close above the 20-period Simple Moving Average (SMA), highlighting a lack of buyer interest.

On the downside, 1.3330 (static level) aligns as an interim support level before 1.3300 (Fibonacci 78.6% retracement of the latest uptrend) and 1.3250 (static level). Looking north, resistance levels could be spotted at 1.3400 (Fibonacci 61.8% retracement), 1.3470 (Fibonacci 50% retracement, 100-period SMA) and 1.3500 (round level, static level).

• The US dollar has gone back and forth against the Japanese yen during trading on Tuesday, as we continue to hover around the crucial ¥149 level.
• This is a level that I think will continue to be very important, especially as we head into the Wednesday session, because it is FOMC day in the United States, as the Federal Reserve will release its latest interest rate announcement and the accompanying statement, along with the press conference.

Technical Analysis

Ultimately, I think this is a market that is trying to build up enough pressure to break to the upside, but I also recognize that it is a market that faces quite a few headwinds. Wednesday will be extraordinarily noisy, right along with Thursday, as we have the Federal Reserve announcement on Wednesday, followed by the Bank of Japan sometime early on Thursday. In other words, this will be a very volatile pair over the next couple of days, so you have to be cautious. However, over the longer term, unless something changes quite drastically, I just don’t see why I would want to short this market as long as we are above the ¥146 level.

Keep in mind that the 50 Day EMA is sitting right around the ¥146 level, so I think that adds even more credence to that idea of a floor being put in the market. Anything below could open up a significant drop lower, perhaps sending the US dollar plunging quite drastically. This will almost certainly have something to do with the Bank of Japan itself, so I’d be paying close attention to that happening if it were to occur after the Bank of Japan meeting.

On a move above the ¥149 level, then I think the US dollar goes looking to the ¥151 level, which is an area that was a swing homemade previously. All things being equal, this is a market that I think you need to be very cautious with, but I also recognize that we are setting up for a bigger move sooner or later, so with that being the case, the market is likely to continue to be volatile, but I do think that we get a longer-term move in the next couple of sessions.

Want to trade our USD/JPY forex analysis and predictions? Here’s a list of forex brokers in Japan to check out.

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.

• The euro has found itself in pretty significant trouble during the session here on Tuesday, testing a major support level in the form of the 1.15 level that also is backed up by the 50 day EMA just above it.
• So, I think it is something worth paying close attention to. Ultimately, I think this is a scenario where traders are going to be looking at this through the prism of whether or not we do break down below the 1.15 level after the FOMC.
• That will be the crucial piece. After all, the FOMC statement or meeting will give us an idea as to what it is the Federal Reserve might do in the future. A lot of traders out there are hoping for some type of reprieve from interest rates and

No Change Expected from the Federal Reserve

It’s not necessarily expected that we will get that reprieve right away, but the September meeting is still a bit of an open question for most traders. And I think it’s important to get an idea as to what the tone of the statement is coming out of the Federal Reserve and Jerome Powell. If it sounds like he’s nowhere near cutting rates, then that could send the US dollar much higher overall.

Ultimately, I think you have to look at this as a market that is right on the verge of trying to make a bigger decision. And if that’s going to be the case, I want to be there, but it’s probably going to be a situation where you are looking at this on how it closes on Wednesday to truly make that decision.

If we close above the 1.16 level, then it’s likely that this market goes looking to the 1.18 level again. If we close below the 1.15 level, then I believe the Euro drops down to the 200 day EMA. We are right on the precipice of a bigger move.

Ready to trade our Forex daily analysis and predictions? Here are the best trading platform for beginners to choose from.

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.

The GBPJPY pair provided new bearish close by its stability below the broken bullish channel’s support, forming a new resistance at 198.45 to increase the chances for the dominance of the suggested bearish bias by its fluctuation near 197.75.

The continuation of providing negative momentum by stochastic supports the negative suggestion, to keep waiting for targeting 197.50 level, where breaking it will open the way for suffering extra losses that might extend to 196.55 and 195.75, while regaining the bullish bias requires forming a strong positive rally to settle above 198.80.

The expected trading range for today is between 196.55 and 198.30

Trend forecast: Bearish

The GBPJPY pair provided new bearish close by its stability below the broken bullish channel’s support, forming a new resistance at 198.45 to increase the chances for the dominance of the suggested bearish bias by its fluctuation near 197.75.

The continuation of providing negative momentum by stochastic supports the negative suggestion, to keep waiting for targeting 197.50 level, where breaking it will open the way for suffering extra losses that might extend to 196.55 and 195.75, while regaining the bullish bias requires forming a strong positive rally to settle above 198.80.

The expected trading range for today is between 196.55 and 198.30

Trend forecast: Bearish

– Written by


David Woodsmith

STORY LINK Pound to Euro FX Forecast: GBP JUMPS 1.25% in “Huge Move” Higher

The Pound to Euro exchange rate (GBP/EUR) has extended its substantial rally seen on Monday, to trade at 1.1548 at the time of updating.

Pound Sterling rallied from the weekly open of 1.1412 to test highs of 1.1555 on Tuesday representing a 1.25 percent gain so far this week.

According to FX analysts at ING Bank, “We saw a huge move lower in EUR/GBP yesterday. Ex post, it could be seen as the UK having a better deal than the EU when it comes to trade.

“In reality, however, it was probably all to do with positioning, where opposing fiscal and monetary prospects between the eurozone and the UK had made long EUR/GBP one of the conviction trades this summer.”

The Pound-to-Euro rate had slumped to 20-month lows close to 1.1420 after Monday’s Asian open before rallying to 1.1490 as the Euro lost ground in global markets and equities made net gains.

The Euro overall lost ground amid a correction from strong gains last week as the Euro-Zone economy will still take a hit.

There are still significant reservations surrounding the UK economy.

According to ING there is the potential for strong GBP/EUR support on any dips to 1.1365. It added, “Sitting long EUR/GBP in quiet August markets is again carrying negative, and a very light UK calendar this week looks unlikely to provide the incentives to add to short sterling positions. Perhaps EUR/GBP can trade something like a 0.8700-0.8770 range this week.” (1.1400 – 1.1495 for GBP/EUR)

Risk appetite strengthened on Monday in response to the US-EU framework trade deal. The deal removed the immediate threat of 30% tariffs from August 1st and lessened the risk of a trade war between the two sides.

European equities hit a 4-month high in early trading while the FTSE 100 index posted a fresh record high.

The Pound tends to gain net support when global risk appetite strengthens.

National Australia Bank senior currency strategist Rodrigo Catril commented; “It could be a positive week, just purely from the fact that now we know the rules of the game, if you like.”

He added; “Now that there is more clarity, you would think that not only in the United States, but around the globe, there will be a little bit more willingness to look at investment, to look at expansions, and to look at where the opportunities are.”

According to Rabobank; “At the very least, the European Union will now not be hit by a 30% levy when the US reinstates its “reciprocal” tariffs. So, the deal should at least remove some of the uncertainty that plagued investors’ and corporates’ decision making.”

If traders are looking to engage in carry trades, high UK yields will offer net support.

The US trade stance with China will also be important with Beijing facing an August 12 deadline for a durable trade pact with the United States.

According to comments overnight, the two are expected to extend their tariff truce by three more months which would help underpin risk conditions.

The Federal Reserve will announce its latest policy decision on Wednesday with strong expectations that rates will be held at 4.50% before cutting rates later in the year.

MUFG commented; “The Fed would have to deliver a hawkish policy surprise in the week ahead to disrupt FX carry trades by dropping plans for rate cuts which appears unlikely at the current juncture.”

The UK CBI retail trade survey improved slightly to -34 for July from -46 previously, but below consensus forecasts of -28 and the 10th successive decline.

Companies expect a further significant decline August as underlying pressures continue.

CBI principal economist Martin Sartorius commented; “Firms reported that elevated price pressures – driven by rising labour costs – and economic uncertainty continue to weigh on household demand, which has contributed to sales volumes falling since October 2024.”

Mortgage lending data is due on Tuesday, but the overall UK economic calendar is light this week and parliament is in recess which will limit political chatter.

Labour disputes in the health sector will be scrutinised given concerns over underlying upward pressure on salaries which will further complicate fiscal policy.

Like this piece? Please share with your friends and colleagues:

International Money Transfer? Ask our resident FX expert a money transfer question or try John’s new, free, no-obligation personal service! ,where he helps every step of the way,
ensuring you get the best exchange rates on your currency requirements.

TAGS: Pound Euro Forecasts

• GBP/USD recovers after touching its lowest level in two months.
• The technical outlook remains bearish, with a chance of a correction in the near term.
• The US economic calendar will feature mid-tier data releases ahead of the Fed meeting.

GBP/USD trades slightly above 1.3350 after having touched its weakest level since late May below 1.3320 earlier in the day. The pair’s technical picture points to oversold conditions, suggesting that there could be a correction before the next leg lower.

The US Dollar (USD) started the week on a bullish note and caused GBP/USD to turn south on Monday, as investors’ concerns over an economic downturn in the United States (US) eased after the US reached a trade deal with the European Union (EU).

Early Tuesday, the risk-positive market environment limits the USD’s gains and helps GBP/USD hold its ground. Additionally, investors might be opting to move to the sidelines before deciding whether the USD has more room on the upside. The Federal Reserve (Fed) will begin its two-day meeting later in the day and announce policy decisions on Wednesday.

Nevertheless, the US economic calendar will offer some mid-tier data releases that could trigger a short-lasting market reaction during the American trading hours.

The Conference Board will publish the Consumer Confidence Index for July and the US Bureau of Labor Statistics will release JOLTS Job Openings data for June. In case these data come in weaker than expected, the USD could struggle to find demand and allow GBP/USD to extend its rebound.

Investors will also pay close attention to fresh developments surrounding the US-China trade negotiations. US Treasury Secretary Scott Bessent and China’s Vice Premier He Lifeng will reportedly meet again on Tuesday after having constructive talks on Monday.

GBP/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart stays slightly above 30 after recovering from 25, suggesting that GBP/USD is in a correction phase after turning oversold earlier in the day.

On the upside, 1.3400 (Fibonacci 61.8% retracement of the latest uptrend) aligns as the first resistance level before 1.3470 (Fibonacci 50% retracement) and 1.3490-1.3500 (100-period SMA, static level). Looking south, support levels could be spotted at 1.3340 (100-day SMA) and 1.3300 (Fibonacci 78.6% retracement).

USD/JPY Technical Analysis

The US dollar initially pulled back a bit during the trading session, but we have that FOMC meeting the next day on Wednesday. So, I don’t know if we will break out to the upside. It’s possible that maybe we do, but I certainly don’t want to throw a bunch of money into the market ahead of a significant announcement that’s going to move everything.

So, with that, I think you have to look at this as a market that, quite frankly, will more likely than not find itself in a more of a buy on the dip type of scenario. Now, the FOMC and the Federal Reserve could do or say something to upset the apple cart as it were, but any pullback from here, as long as we can stay above the 146 yen level, I look at it as value.

AUD/USD Technical Analysis

The Australian dollar continues to plunge and it is getting interesting, but we need to get below the 200 day EMA for me to start shorting. Otherwise, we could just bounce right back into this channel that we’ve been stuck in for what seems like a lifetime.

This is a pair that has been very difficult to trade, in the sense that it’s been such a grind and not much of a trend, although it definitely ended up trend, but it’s been a fight the whole way. With this, I’m waiting to see if we bounce from this area here to start buying. Otherwise, I’m looking forward to break down below the 200-day EMA and offering a nice shorting opportunity.

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