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• The British pound initially rallied against the Japanese in during the trading session on Wednesday as we tested the crucial 195 level again.
• The 195 level is an area that’s been important multiple times.
• So, I do think it makes a lot of sense that we are just hanging out here.

With that being said, I like the idea of buying dips, but we may get a little bit deeper correction from which we can trade from. With that being the case, I am taking a look at the 50 day EMA as well as the 200 day EMA indicators underneath to offer a bit of support. Anything below there probably opens up a move back down to the 190 yen level. The interest rate differential between the United Kingdom and the Japanese yen itself is pretty wide. So, I do think that there will be buyers out there willing to get involved and start buying the pound.

Timing Will Matter

Nonetheless, this is more or less a question of when finding a trade, whether or not you can find the timing correct as well. This is a very volatile market, but you should also keep in mind that this is a market that, quite frankly, I think you want to be looking at the upside, regardless of the fact that we had a pretty ugly day on Wednesday. A lot of this might have been driven mainly by bad news out of the United States with the employment and the ISM services PMI.

As you can see, we had fallen on the hourly chart pretty significantly, but really at the end of the day, sooner or later, people realize that the British pound and the Japanese yen have nothing to do with the United States, at least not directly. And they come in and they take advantage of that carry trade.

Begin trading our daily forecasts and analysis. Here is a list of Forex brokers in Japan to work with.

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 returned to fluctuated below 194.55 level, forming some of the intraday bearish waves, attempting to gather the required positive momentum to reach the main positive stations that are located near 195.70 reaching 196.45.

Depending on forming an important support by the moving average 55 reach to 192.40, to confirm the confinement of the trading within the bullish track, to increase the chances for reaching the suggested targets, while the decline below this support will cancel the bullish suggestion in the current trading, to expect suffering new losses by reaching 191.65 reaching 38.2%Fibonacci correction level at 190.90.

The expected trading range for today is between 193.00 and 195.70

Trend forecast: Bullish

June 4, 2025 – Written by Frank Davies

STORY LINK Pound to Dollar Forecast: GBP’s Momentum is “Firmly in Bullish Territory”

The Pound-to-Dollar exchange rate (GBP/USD) found support close to 1.3500 on Wednesday and was initially held in tight ranges.

Weaker-than-expected US data, however, triggered renewed dollar losses with GBP/USD surging to just above 1.3550. Traders will be targeting 39-month highs close to 1.3600.

Scotiabank is still bullish on the Pound; “the multi-month trend is bullish, and momentum is firmly in bullish territory with an RSI at 60. The DMI’s are providing confirmation, along with the MACD. The near-term range is defined by support below 1.3450 and resistance above 1.3550.”

According to UoB; “the likelihood of GBP closing above 1.3600 will grow in the next few days as long as the ‘strong support’ level at 1.3470 is intact.

The US ADP jobs data recorded an increase in private payrolls for May of 37,000 for May compared with consensus forecasts of a 111,000 increase.

The April increase was also revised marginally lower to 60,000 from the flash estimate of 62,000.

There was an increase in jobs for medium-sized businesses, but losses on the month for small and large companies.

According to ADP chief economist Dr. Nela Richardson; “After a strong start to the year, hiring is losing momentum. Pay growth, however, was little changed in May, holding at robust levels for both job-stayers and job-changers.”

The ISM non-manufacturing business confidence index dipped to an 11-month low of 49.9 for May from 51.6 previously and well below consensus forecasts of 52.0.

There was a sharp decline in orders, but employment did edge higher on the month.

Prices increased at a faster rate with the strongest reading since December 2022.

The data will reinforce fears over stagflation in the US economy with a weaker economy combined with increased inflation. Markets are also still fretting over tariffs.

The 50% tariffs on aluminium and steel imports went into effect on Wednesday, further increasing underlying uncertainty.

According to the UK government, it will not be subjected to 50% tariffs on steel and aluminium with these remaining at 25% for the time being, but this may be of small comfort.

Paul Donovan, chief economist at UBS Global Wealth Management, commented, “UK steel exports were supposed to incur no tariff, so Trump’s abrupt change may cause UK negotiators to question the value of ‘agreements’ made.”

Scotiabank commented on the global dimension; “Meanwhile, the shifting sands of US tariff policy have to make it harder for countries to negotiate effectively with the US.

It added; “There’s another 5 weeks of the current tariff reprieve to run but there’s no real sense that certainty for businesses will improve anytime soon.”

According to Commerzbank; “One of the most important arguments against the greenback is the unpredictable US (tariff) policy, which could cause considerable damage to the US economy. But the uncertainty goes both ways: it is just as conceivable that the US president will do a U-turn again – we have seen that often enough. Let us remember, for example, the reduction in tariffs on China, albeit only for 90 days, which led to a significant rally in the dollar.”

It added; “So it is not the case that, alongside the USD doomsday scenarios, USD-positive scenarios are completely unthinkable.”

Earlier, the UK PMI services-sector index was revised higher to 50.9 from the flash reading of 50.2 and above the April reading of 49.0 which suggested limited expansion in the economy.

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TAGS: Pound Dollar Forecasts

EUR/USD Analysis Summary Today

• Overall Trend: Upward.
• Today’s Euro-Dollar Support Levels: 1.1330 – 1.1270 – 1.1190.
• Today’s Euro-Dollar Resistance Levels: 1.1460 – 1.1500 – 1.1580.

EUR/USD Trading Signals:

• Buy Euro-Dollar from the 1.1290 support level with a target of 1.1420 and a stop-loss of 1.1200.
• Sell Euro-Dollar from the 1.1500 resistance level with a target of 1.1200 and a stop-loss of 1.1610.

EUR/USD Technical Analysis Today:

The gains for the EUR/USD currency pair halted at the 1.1455 resistance level, with the pair quickly retreating to the 1.1356 support level during Wednesday’s trading. This movement followed weaker-than-expected European inflation data, a reduction in global growth forecasts by the Organisation for Economic Co-operation and Development (OECD) and escalating political uncertainty in the Netherlands.

According to economic calendar data, Eurozone consumer prices rose by 1.9% year-on-year in May, falling short of the 2.0% forecast. This reinforced expectations that the European Central Bank (ECB) will cut interest rates by 25 basis points later this week – likely the last cut before a pause in the monetary easing cycle. Meanwhile, the OECD lowered its global economic growth forecasts, projecting GDP growth to slow from 3.3% in 2024 to 2.9% in both 2025 and 2026, citing escalating trade tensions.

In the Netherlands, political instability intensified after the government collapsed due to disagreements over immigration policy, prompting far-right leader Geert Wilders to withdraw his party from the ruling coalition. Overall, trade policy uncertainty remained a key focus, with reports indicating that the United States is demanding final offers in ongoing negotiations by Wednesday – just days after President Donald Trump threatened to double tariffs on steel and aluminium.

Trading Advice:

We still recommend selling the EUR/USD on any strong upward bounce, but without taking risks and waiting for the reaction to this week’s important events and data.

Today’s Technical Levels for Euro-Dollar:

Based on the daily timeframe chart, despite the selling pressure, the overall trend for the EUR/USD currency pair remains upward, supported by the move towards and above the 1.1400 resistance. Currently, the 14-day Relative Strength Index (RSI) is trending upwards and still has room for further gains before reaching overbought territory. Obviously, this could occur at the 1.1520 and 1.1600 resistance levels, respectively. At the same time, the MACD indicator lines are also trending upward, assuring bulls that they can target higher peaks if US jobs data comes in lower than expected and if the ECB this week abandons its dovish tone.

Euro-Dollar trading today will react to the announcement of the Services Purchasing Managers’ Index (PMI) readings for European economies, starting with the Spanish reading at 10:15 AM EEST, followed by the German reading at 10:55 AM EEST, and the Eurozone aggregate reading at 11:00 AM EEST. Then, more crucially, the US ADP Non-Farm Employment Change will be announced at 3:15 PM EEST, and the US ISM Services PMI reading at 5:00 PM EEST.

Tomorrow, the European Central Bank is expected to cut interest rates in its decision, but recent inflation figures may increase the likelihood of another rate cut afterward.

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• GBP/USD trades in a narrow channel above 1.3500 in the European session on Wednesday.
• The US economic calendar will offer ADP Employment Change and ISM Services PMI data.
• The pair’s near-term technical outlook fails to provide a directional clue.

GBP/USD moves up and down in a tight band above 1.3500 in the European session on Wednesday after posting small losses on Tuesday. The near-term technical outlook highlights the pair’s indecisiveness ahead of key data releases from the US.

The renewed US Dollar (USD) strength on improving risk mood and the better-than-expected JOLTS Job Openings data caused GBP/USD to stretch lower on Tuesday. Meanwhile, mixed comments from Bank of England (BoE) officials during the testimony before the UK Treasury Select Committee made it difficult for Pound Sterling to attract buyers.

BoE policymaker Swati Dhingra adopted a dovish tone and said that an overly restrictive monetary policy was risking suppressing demand and disincentivizing investment. On a hawkish point, BoE policymaker Catherine Mann argued that future policy decisions will require certainty that inflation is on track. “Services price inflation is above what I view as consistent with getting Consumer Price Index (CPI) back to target,” Mann said. Meanwhile, BoE Governor Andrew Bailey repeated that they need to have a gradual and careful approach to further policy easing

Later in the day, the US economic calendar will offer the ADP Employment Change and the ISM Services PMI data for May.

In case the ADP data comes in above the market expectation of 115,000 and highlights health conditions in the labor market, the USD could gather strength with the immediate reaction and cause GBP/USD to turn south.

Similarly, the market reaction to the ISM Services PMI is likely to be straightforward. If the data arrives below 50 and shows a contraction in the service sector’s business activity, the USD could struggle to hold its ground, opening the door for a leg higher in GBP/USD.

GBP/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart stays above 50 and GBP/USD holds above the ascending trend line, reflecting a lack of seller interest.

On the upside, 1.3550 (mid-point of the ascending channel) aligns as the first resistance level ahead of 1.3600 (static level, round level) and 1.3700 (static level, round level). Looking south, supports could be seen at 1.3500 (20-period Simple Moving Average (SMA), ascending trend line), 1.3430 (100-period SMA) and 1.3380 (Fibonacci 23.6% retracement of the latest uptrend).

• The US dollar has rallied rather significantly during the course of Tuesday trading, completely wiping out most of the selling pressure from the Monday session.
• This suggests that US dollar selling pressure is somewhat limited, and it also suggests that perhaps people are looking to try to take advantage of the interest rate differential over the longer term.
• After all, you get paid to hang on to this trade, and that will continue to be the case going much further into the future.

A Tale of Two Central Banks

Currently, the Bank of Japan has a major problem. The biggest problem that I see is the fact that the Japanese Government Bonds continue to see a serious lack of demand. In other words, the debt market in Japan is starting to freeze up, which is absolutely disastrous. This is a situation that the Bank of Japan will be forced to address, and the only thing that they can do is start buying the bonds themselves. This is quantitative easing, and it’s coming back to Japan sooner than most people realize.

On the other side of the Pacific Ocean, we have the Federal Reserve, which although is starting to see a little bit of weakness in the US economy, the reality is that we are probably several months away from seeing the US cut interest rates, and even then, we are probably talking about 0.25% at that time. In other words, the interest rate differential will continue to favor the US quite drastically, and as long as that’s the case, I do think there is a bit of a bid in this market. The ¥142 level continues to be important, and even if we broke down below that level, then I think you have a ¥140 level offering support. On the other hand, if we do rally from here, and break above the ¥145 level, we will then overtake the 50 Day EMA, which could have traders buying the US dollar again.

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 initially tried to rally during the trading session on Tuesday, but gave back gains as we have fallen rather significantly.
• By doing so, it looks as if the market is trying to sort out whether or not we have any real shot at breaking out to the upside, or are we going to continue to see more sideways range bound trading?
• I suspect it is a situation where we probably go more sideways than anything else over the long term.

Now that doesn’t mean we can’t trade within it. It just means that we have a definite range between the 1.12 level and the 1.15 level. This is a market that I think is trying to sort out whether or not we are about to roll over. And today’s action on Tuesday does suggest that maybe we could, but it’s a little bit early to get aggressively short of the Euro, despite the fact that is looks “suspicious.”

On a Move Lower

A breakdown below the 1.12 level would be extraordinarily negative as it would break down below a swing low over the last couple of weeks. And then the 50 day EMA breaking down below the 50 day EMA opens up the possibility of 1.0950 being targeted where the 200 day EMA presently resides. If we can take out the high, then it’s very possible that the euro goes to looking to the 1.18 level based on the measured move of 300 points that we are trading in right now.

For what it is worth, it does look a lot like the gold market right now. So, you may be watching both at the same time, as the correlation between the US dollar and Gold is strongly negative at the moment, at least for the last few weeks.

Ready to trade our EUR/USD daily forecast? Here’s a list of some of the top forex brokers in Europe 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 GBPJPY pair succeeded to surpass the negative pressures, forming a bullish wave to settle above the barrier at 194.55 level, attempting to confirm regaining the bullish bias, we should confirm that providing a new close above the breached barrier is important to reinforce the chances for forming bullish waves, to target 195.70 and 196.45.

By the above image, we notice stochastic attempt to provide positive momentum, to increase the chances for confirming the bullish scenario and begin achieving the suggested targets.

The expected trading range for today is between 194.20 and 195.70

Trend forecast: Bullish

The EURJPY pair ended yesterday’s trading positively, due to its repeated stability above 163.35 level, attacking the initial barrier near 163.85, which represents one of the keys to regain the bullish bias in the near and medium period trading.

The price needs a new positive momentum, assisting to reinforce the chances for forming more of the bullish waves, to begin targeting bullish stations by its rally towards 164.85 and 165.35, while the price return to fluctuate below 163.35 will force it to activate the bearish correctional track before reaching any on the suggested positive stations.

The expected trading range for today is between 163.50 and 164.85

Trend forecast: Bullish