GBP/USD Forecast: Pound Sterling loses traction on mixed BoE commentary

Following Monday’s rally, GBP/USD loses traction and declines toward 1.3500 in the European session on Tuesday. The technical outlook points to a loss of bullish momentum as investors await US data.

While testifying on the Monetary Policy Report before the UK Treasury Select Committee on Tuesday, Bank of England (BoE) Governor Andrew Bailey noted that they have not seen particular inflation surprises and reiterated that he prefers a gradual and careful approach to policy-easing. Read more…

GBP/USD takes a breather before next bullish move

GBP/USD has eased slightly below May’s three-year high of 1.3592, but Monday’s solid rebound has renewed optimism that the bulls are still in control.

For further upside momentum, the price needs a decisive close above the resistance line from July 2023 at 1.3597, which capped gains last week. A breakout above the key constraining zone of 1.3658 could trigger a more exciting rally toward the 2022 peak at 1.3747. Beyond that, attention could shift to the ascending trendline around 1.3865. Read more…

GBP/USD Elliott Wave technical analysis [Video]

The daily chart presents a bullish outlook for GBP/USD, highlighting strong impulsive movement in the current wave pattern. The analysis indicates the formation of orange wave one as part of a larger bullish trend, situated within navy blue wave three. This implies the completion of navy blue wave two’s corrective phase and the start of a new impulse, marking the early phase of a potentially extensive upward trend. Read more…

• The USD/JPY price analysis shows strength in the yen after Ueda’s comments.

• The BoJ will hike rates if the economy re-accelerates.

• Data revealed soft business activity in the US manufacturing sector.  

The USD/JPY price analysis shows strength in the yen after BoJ’s Ueda said the central bank would hike rates if growth re-accelerates. At the same time, the yen strengthened as safe-haven demand rose on renewed trade tensions between the US and its trading partners.

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Bank of Japan Governor Kazuo Ueda said on Tuesday that the central bank would hike rates if the economy re-accelerated. He also noted that wage growth must re-accelerate. At the moment, Trump tariffs have dimmed the outlook for the economy. Therefore, it might not be the best time to hike interest rates. However, if the economy rebounds after a brief pullback, policymakers will be ready to hike. This news boosted the yen.

Furthermore, the yen continued its rally as safe-haven demand rebounded on trade tensions. Trump promised to double tariffs on steel and aluminum imports. The move will likely increase trade tensions between the US and its partners, like Canada and the Eurozone. Moreover, it revealed that Trump was going on with his tariff campaign. Therefore, the risk of a global trade war remains. 

Elsewhere, the dollar eased after data revealed soft business activity in the US manufacturing sector. The ISM PMI came in at 48.5, below estimates of 49.3. The decline showed the effects of Trump’s tariffs on the US economy. Traders will now wait to see employment figures.

USD/JPY key events today

USD/JPY technical price analysis: Bears challenge the 142.55 support

On the technical side, the USD/JPY price is testing a major support at the 142.55 level. It trades below the 30-SMA with the RSI under 50, suggesting a bearish bias. The price recently reversed to the downside when it broke and stayed below the 30-SMA. 

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Furthermore, although there was a strong rebound at the 142.55 level, it only made a lower high. This is a sign that bulls could not sustain a move above the 30-SMA. As a result, bears returned to push USD/JPY below the SMA. 

At the moment, the price is challenging the 142.55 support. A break below this level will make a lower low, confirming a continuation of the downtrend. Moreover, such a move would allow bears to target the 140.01 support level.

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EUR/USD Analysis Summary Today

• Overall Trend: Upward.
• Today’s Euro-Dollar Support Levels: 1.1360 – 1.1290 – 1.1180.
• Today’s Euro-Dollar Resistance Levels: 1.1485 – 1.1560 – 1.1630.

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 fate of tariffs between the European Union and the United States continues to dictate the trading direction of the EUR/USD in the coming days. The start of the US jobs report week was bullish, with the Euro-Dollar jumping towards the 1.1450 resistance level, near the pair’s five-week high, before settling around 1.1424 at the time of writing, awaiting further developments.

According to trusted brokerage platforms, Euro trading is experiencing a notable rise with renewed global trade uncertainty due to Donald Trump. Technically, the EUR/USD gains have pushed performance past a chart resistance line at 1.1418, opening the door for a rise to 1.1450, a target we consider suitable for this week’s forecast. However, today’s close must be above the 1.1418 resistance level to confirm its breach, and a retracement during the day is possible. Currency exchange rates tend to remain in contact with the nine-day moving average, implying a slight rebound is possible before the rally resumes. Overall, the EUR/USD has returned to its strong trajectory, and the stronger path is upward in the coming days, driven by a compelling fundamental narrative surrounding escalating global trade tensions.

US President Donald Trump must have been influenced by the calm that followed the US-China trade agreement in early May, as he now accuses China of violating this agreement. Furthermore, after markets closed on Friday, the US president raised tariffs on aluminium and steel. Overall, uncertainty surrounding tariffs has escalated again following Trump’s announcement on Friday evening that he would double tariffs on steel and aluminium, to 50%, effective June 4. Consequently, the EUR/USD pair has returned above 1.1350, US bond yields are seeing a significant increase, while stock futures are seeing a significant decline.

Please keep in mind that the current rise in the Euro’s price is part of the traditional market reaction to escalating tariff tensions. Meanwhile, Trump’s reminder of his support for tariffs and his dissatisfaction with the US trade balance will support the 2025 bullish trend for the foreseeable future. Also, we would not be surprised if the EUR/USD records new record highs as a result.

Be cautious: Tariffs pose a problem for the dollar as they will undermine US economic growth. The problem is that the US economy is still performing well, undermining this premise. Sooner or later, data will begin to show the type of weakness that US dollar sellers have anticipated in recent months. The June data schedule is important because it provides data covering a period that will certainly embody trade uncertainty. With strong demand for the US dollar, large movements will be in response to better-than-expected data that challenges gloomy forecasts, leading to an unbalanced upward reversal for the US dollar (i.e., a drop in the EUR/USD).

Trading Tips:

We still advise selling the Euro against the US Dollar on every strong upward rebound, but without taking risks and while monitoring the factors influencing the trading of this currency pair this week.

Besides the fate of tariffs, everyone will be cautiously awaiting the crucial US Non-Farm Payrolls figures on Friday. The consensus expects a 125,000 job increase in May, with a decline in private sector jobs and indications of job losses in the manufacturing sector. The country’s unemployment rate is expected to remain stable at 4.2%. According to currency experts, if the unemployment rate rises more than expected, we believe the market reaction could be swift. Consequently, the dollar and bond yields are likely to fall as the market rushes to price in data-dependent Federal Reserve interest rate cuts.

Euro Trading Will Monitor ECB Meeting Results

Don’t forget the European Central Bank meeting next Thursday. Although the US dollar’s interest rate is undoubtedly the most important factor, we expect some short-term volatility around the decision. A 25-basis point rate cut is expected to lower the key interest rate to 2.0%. The cut itself is not the decisive factor, but rather the forward guidance that will move the exchange rate. With inflationary pressures subsiding in the Eurozone, there is little incentive for President Christine Lagarde to disregard further interest rate cuts, especially if the ECB believes that US tariffs will negatively impact future growth.

Overall, the continuous flow of cuts is expected to benefit the Eurozone economy, but it will hinder the Euro’s progress. Lagarde is very likely to stick to her usual message: that interest rates are not on a predetermined path and that the ECB remains data dependent. This means more cuts are coming, but there is no need to anticipate a faster pace, nor to bet on more cuts later beyond what is already expected. This will provide limited opportunity to guide Euro exchange rates in any meaningful direction, and movements following the ECB decision are likely to fade as a result.

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The GBPJPY pair formed more of the slow bearish waves, confirming their surrender to the suggested bearish scenario, by moving away from the barrier at 194.55 level, to repeat the pressure on the intraday obstacle at 192.90.

The continuation of providing negative momentum by stochastic will assist in forming an extra decline to target 192.35 level, reaching the main support at 191.70, while breaching the mentioned barrier will cancel the negative suggestion, to provide the price a chance to renew the bullish attempts by its rally towards 195.20 initially.

The expected trading range for today is between 192.35 and 194.20

Trend forecast: Bearish

• The euro initially gapped lower against the Japanese yen during trading on Monday and then continue to drop from there.
• That being said, the market is likely to continue to see a lot of noisy behavior, as the market has been very choppy over the last several weeks.
• In fact, the shape of the candlestick is somewhat like a hammer, but I would also pay attention to the other bits and pieces of technical analysis that could give you a bit of a “heads up” as to where we are going to go next.

Technical Analysis

The technical analysis for this EUR/JPY pair is somewhat bullish, but it is contained within a very well defined consolidation range. The ¥165 level continues to be an area worth watching, as it had been a significant resistance barrier before, and of course it is an area that seen a lot of market memory attached to it in the past. If we can break above that level, then I do think that the euro has a real shot at going much higher against the Japanese yen, but I would point out that this is probably a move that would be more about the Japanese yen than anything else.

On the other hand, if we do fall from here, it’s worth noting that the 50 Day EMA’s is just below, and then underneath there we have the 200 Day EMA which is currently right around the ¥162 level. The market breaking down below that level would be very negative, and it could open up the possibility of a drop toward the ¥155 level, but at this point in time it doesn’t look like we have any real appetite to start buying the yen. Because of this, I think we remain a little bit more “risk on” than would be required for the Japanese yen to suddenly strengthen, and with that I look at the short term pullbacks along the way as potential buying opportunities in this pair.

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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.

• GBP/USD edges lower toward 1.3500 in the European session on Tuesday.
• BoE policymakers testified on the monetary policy before the UK Treasury Select Committee.
• The technical outlook suggests that buyers struggle to retain control.

Following Monday’s rally, GBP/USD loses traction and declines toward 1.3500 in the European session on Tuesday. The technical outlook points to a loss of bullish momentum as investors await US data.

While testifying on the Monetary Policy Report before the UK Treasury Select Committee on Tuesday, Bank of England (BoE) Governor Andrew Bailey noted that they have not seen particular inflation surprises and reiterated that he prefers a gradual and careful approach to policy-easing.

BoE policymaker Swati Dhingra argued that an overly restrictive policy was risking suppressing demand and disincentivizing investment. Meanwhile, BoE policymaker Catherine Mann adopted a more cautious tone, saying 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 added.

Following these mixed remarks, GBP/USD finds it difficult to attract buyers.

In the second half of the day, the US Bureau of Labor Statistics will publish the JOLTS Job Openings data for April. A noticeable increase in this data, with a reading of 7.7 million or higher, could support the USD with the immediate reaction and cause GBP/USD to extend its correction. On the flip side, a disappointing reading below 7 million could hurt the USD and open the door for a rebound in the pair.

GBP/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart declines toward 50, highlighting a loss of bullish momentum. The 20-period and the 50-period Simple Moving Average (SMA) form the first support level at 1.3500. In case GBP/USD falls below this level and starts using it as resistance, technical sellers could take action. In this scenario, 1.3410 (100-period SMA) and 1.3365 (200-period SMA) could be seen as next support levels.

On the upside, the first resistance level could be spotted at 1.3530 (mid-point of the ascending channel) ahead of 1.3600 (static level, round level) and 1.3700 (static level, round level).

• The US dollar has fallen a bit during the trading session here on Monday as the manufacturing PMI numbers came out weaker than anticipated.
• All things being equal, this is a market that I think continues to see a lot of noisy trading overall as the Japanese yen, of course, is considered to be a safety currency.

But at the same time, you have to understand that the US dollar is as well. Now, with the manufacturing PMI numbers coming out weaker than anticipated, obviously people ran from the greenback. But I think ultimately, we are going to be looking at this as a market that remains somewhat tight and rangebound.

The 142 yen level is very supported, while the 145 yen level above is significant resistance. Once we break above the 50 day EMA, which is just above the 145 yen level assuming that we do, that would be a very bullish sign for the greenback. If we break down below the 142 yen level, then we could go looking to the 140 yen level, which has been massive support a couple of times in the past.

Interest Rate Differential

Interest rate differential does favor the US dollar overall, and I would keep that in the back of my mind as you do get paid to hang on to this pair. And over the longer term, that can really add up. Furthermore, we’ve had some problems in the Japanese government bond markets as there’s been two or three days that I know of in the last 10 days that there’s been no bids, meaning the Bank of Japan is probably going to have to step into the market, and buy bonds and that’s the same thing as quantitative easing. So, we’ll have to wait and see how that is going to affect this pair but right now I still think we have a much more likelihood of going higher than lower but right now we’re in a very noisy area that will continue to favor short-term range bound trading.

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.

June 2, 2025 – Written by Frank Davies

STORY LINK Euro to Dollar Forecast: EUR/USD Aiming for 1.15+

The Euro has gained support from underlying capital inflows with the Euro to Dollar exchange rate (EUR/USD) jumping to 5-week highs near 1.1440 before settling around 1.1410.

The U.S. dollar has again been undermined by trade fears following President Trump’s move to increase tariffs on steel and aluminium, while underlying confidence in the US economy and dollar remains fragile.

According to ING; “EUR/USD has some intra-day resistance at 1.1425, above which a short-term run-up to 1.1500 beckons.”

Scotiabank commented; “The latest extension of gains above 1.14 has delivered a fresh local high reaching levels last briefly seen in late April. The RSI is bullish at 60 but well short of the overbought threshold at 70. Recent support has been observed around the 50 day MA (1.1209) and resistance appears limited ahead of the late April high at 1.1573.”

Late on Friday President Trump stated that tariffs on steel and aluminium imports would be doubled to 50% from 25%.

The move triggered fresh unease surrounding the US economic outlook and increased speculation that the Administration would look to target tariffs on individual sectors if the reciprocal tariffs are eventually blocked by the courts.

MUFG commented; “The flip-flopping on trade policy looks set to continue and it appears the uncertainty this creates does not bother President Trump at all. That is likely to give investors the reason to renew selling of the US dollar.

There are also important wider tensions between the US and China with both sides accusing the other of not violating the trade truce.

There will be fears that Trump will decide to raise the level of tariffs once again and that the economy will be undermined by uncertainty.

The ISM manufacturing business confidence index edged lower to a 6-month low of 48.5 for May from 48.7 previously and below expectations of 49.3.

Markets are also uneasy over the US Budget Bill which will be debated in the Senate this month.

The House version, approved last week, would give powers under Section 899 to the US Treasury to impose a retaliatory tax of up to 20% on any country’s residents employing ‘discriminatory’ taxes.

According to Barclays “S899 could be seen as a tax on the U.S. capital account at a time when investor nervousness towards U.S. assets has grown.”

It added; “Actively reducing foreigners’ total return on their U.S. investments would dent inflows and weigh on the dollar, all else equal.”

MUFG noted that the dollar index is within 1% of the lows recorded on April 21st.

It added; “Certainly if the Trump-Xi meeting goes badly or if it doesn’t take place at all, that low-point for the dollar could well be breached this week, taking us to levels not seen since March 2022.”

There are strong expectations that the ECB will lower interest rates this week with a 25 basis-point reduction in the deposit rate to 2.00%.

According to Scotiabank; “In terms of event risk, Thursday’s ECB meeting will be critical as policymakers deliver a fresh set of forecasts and offer some insight into their expectations for rates.”

It added; “With markets pricing at least one more 25bpt cut by December, the risk lies with a neutral or hawkish cut with messaging the signals a possible end to the easing cycle.”

Danske Bank still expects rates will be slashed to 1.50% this year, but with risks tilted towards smaller cuts.

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TAGS: Euro Dollar Forecasts

The EURJPY pair announced its readiness to activate the bearish correctional track by providing some negative trading by reaching below 163.35 level, stochastic exit from the overbought level might increase the negative pressure on the price, to keep preferring the bearish correctional bias domination, which might target 162.40 level reaching the support at 161.85.

Note that the chance of regaining the bullish bias remains valid, depending on forming several bullish waves that allows it to surpass 163.85 level, and holding above it to ease the mission of achieving several gains that begin at 164.85.

The expected trading range for today is between 162.40 and 163.55

Trend forecast: Bearish

June 2, 2025 – Written by David Woodsmith

STORY LINK GBP/USD Forecast: Dollar on the Ropes, Pound to Challenge 39-Month Best

Unease over tariffs, the US economic outlook and underlying unease over fiscal policy sapped dollar support on Monday.

US equity future also lost ground which hampered the US currency.

After dipping to 1.3450 on Friday, the Pound to Dollar (GBP/USD) exchange rate surged to around 1.3550 on Monday and near 39-month highs just below 1.3600 posted last week.

According to UoB; “the current price movements still appear to be part of a range trading phase, albeit a higher one, between 1.3400 and 1.3600.”

Any break above 1.3600 would be likely to trigger another round of buying.

Late on Friday, President Trump announced that the tariffs on steel and aluminium imports into the US would be increased to 50% from 25% on June 4th.

In an immediate reaction, the EU Commission threatened to retaliate and added; “This decision adds further uncertainty to the global economy and increases costs for consumers and businesses on both sides of the Atlantic.”

The legal row over Trump’s reciprocal tariffs is also a key element after an appeals court overturned an immediate ban and stated that tariffs could remain in effect until the legal process is completed.

There are expectations that the process will end up in the Supreme Court.

Danske Bank commented; “legal challenges have introduced considerable uncertainty into ongoing trade negotiations, with US trading partners now reassessing the most likely outcomes.”

According to ING; “Either the Supreme Court overturns the existing ruling, in which case, nothing changes. Or, if that fails, then surely the US Administration simply rebuilds these tariffs through other means, which there are plenty of.”

It added; “In the meantime, that may well embolden Trump to crack on with other sectoral tariffs on the likes of chips and pharma, which are not subject to this court action.”

Over the weekend, the US and China also exchanged barbs over compliance with existing trade agreements.

ING commented; “It’s not quite fair to say that the US-China trade deal reached in Geneva last month is unravelling, but both sides clearly seem frustrated.”

It added; “Any early end to the deal, which lasts until 12 August, would hit risk assets and the dollar again. All the while, talks with both the EU and China are not exactly going well.

The clock is also ticking on the July 9th deadline when the 90-day tariff pause is due to expire.

According to Nordea; “The US administration is reportedly already planning alternatives under different US laws to impose tariffs, and we do not think the threat of major tariffs has receded in any way.”

MUFG commented; “The risk is that prolonged policy uncertainty in the US will hurt the US economy more leading to a weaker US dollar.”

Fiscal policy also remains an important background focus.

According to Nordea; “We do note that fiscal worries have been a recurring market theme in the US in the past years, but usually only for a relatively short period of time.”

It added; “Only time will tell, whether this time will be different. However, at least it is easy to argue that since the current uncertainties go well beyond fiscal worries and rising public debt and include doubts towards USD investments more broadly, this time the risks in favour of clearly higher risk premia.”

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