– Written by


Tim Boyer

STORY LINK Pound Sterling to Dollar Forecast: Fiscal Shock Sends GBP Sliding Toward 1.34

The Pound to Dollar exchange rate (GBP/USD) weakened on Thursday as fresh concerns over the UK’s fiscal outlook rattled gilts and reinforced fears of a “doom loop” between rising yields and higher debt-servicing costs.

Government borrowing surged to £18.0bn in August, the highest for five years, fuelling deficit worries ahead of the November budget.

Against this backdrop, the Pound to Dollar (GBP/USD) exchange rate fell to 10-day lows near 1.3480 before stabilising around 1.3500.

GBP/USD Forecasts: UK Borrowing Worries Hammer Pound and Gilts

Sterling came under pressure after the latest public finance figures revealed a sharp jump in the deficit, extending the five-month shortfall to £83.8bn compared with £67.6bn a year earlier, and well above Office for Budget Responsibility (OBR) projections.

Neil Wilson, UK investor strategist at Saxo Markets, was scathing:

“Sterling is rightly getting the treatment because the borrowing is a) too high, b) unsustainable, c) out of control and d) never going to change.”

The bond market reaction was swift. Ten-year gilt yields climbed to 4.70%, while 30-year yields jumped to 5.55%, edging back towards the 27-year highs hit earlier this month.

Analysts warned the move threatens to worsen the debt burden and intensify fiscal risks.

Matt Swannell, chief economic advisor to the EY ITEM Club, warned;

“the task of getting the public finances back on track could be made much more difficult by a downgrade to the OBR’s very optimistic growth forecasts, leaving a £20bn hole in tax revenue.”

PwC economist Nabil Taleb added;

“Months of high borrowing and the political challenge of cutting spending have all but wiped out the chancellor’s headroom. The test will be whether she [Chancellor Reeves] can make them palatable to voters and markets.”

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TAGS: Pound Dollar Forecasts

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USD/JPY Technical Analysis

The US dollar initially fell a bit against the Japanese yen but turned around to show signs of life. After the BOJ announcement, which really wasn’t much of an announcement, we are sitting right around the 200-day EMA, and we are in the middle of this consolidation area that we have been in for some time.

The 146 level on the bottom is support. The 149 level on the top is resistance. If we can break above the 149 yen level, then I think we really start to take off towards the 151 yen level. All things being equal, this is a market that I do think you favor the upside, not necessarily the downside, but we are still very bound.

AUD/USD Technical Analysis

The Australian dollar continues to fall and now looks a lot like the euro. Are we going to reenter the previous consolidation area? I don’t think it’s necessarily a market that you need to sell right away, but it certainly doesn’t look strong. We’ll just have to wait and see. The 0.67 level was important back in October of 2024 and it has shown itself to be important again. That being said, this is a market that I think is still one that you need to be a little bit cautious with, but ultimately, I am starting to become more neutral again, and this may have been just a bunch of noise. Again, I think the market will probably think about this over the weekend, and then we have to make a bigger move.

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

• The USD/JPY price analysis shows increasing pressure within the Bank of Japan to hike interest rates.
• BoJ policymakers Hajime Takata and Naoki were ready to hike interest rates.
• The dollar continued its recovery after the Fed meeting.

The USD/JPY price analysis shows increasing pressure within the Bank of Japan to hike interest rates, which briefly boosted the yen on Friday. However, dollar strength after the expected Fed rate cut soon undid the gains in the yen.

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The Bank of Japan on Friday kept interest rates steady as expected. However, policymakers Hajime Takata and Naoki Tamura voted against the move. Instead, they were ready to hike interest rates by 25-bps. The dissent came as a surprise to many and led to a rally in the yen.

“The dissent from Takata and Tamura highlights growing hawkish pressure inside the BOJ,” said Charu Chanana, Chief Investment Strategist at Saxo.

“While the majority still favour a steady path, the presence of two board members voting against today’s decision suggests the debate is tilting toward quicker normalisation.”

However, the yen rally was brief, as the dollar continued its recovery after the Fed meeting. The central bank kept interest rates unchanged and signaled more to come. However, Powell also emphasized that they would keep monitoring inflation risks.

USD/JPY key events today

Traders are not looking forward to any key releases from Japan or the US. Therefore, they will keep absorbing policy decisions.

USD/JPY technical price analysis: Bears give up after false breakout

On the technical side, the USD/JPY price is back in its range after a false bearish breakout. It trades above the 30-SMA, with the RSI above 50, suggesting bulls are currently in the lead. Therefore, the price will likely soon climb to retest the range resistance.

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USD/JPY has maintained its sideways move between the 146.50 support and the 149.00 resistance. However, bears recently attempted to break out of this consolidation. The price briefly dipped below the range support but was quickly rejected. As a result, it made a large bottom wick and pulled back into the range.

Afterwards, bulls took over by pushing the price above the 30-SMA. With bulls in the lead, the price will soon challenge the range resistance. If it holds firm, the sideways move will continue. On the other hand, a breakout would likely start a bullish trend.

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Platinum price remains under the effect of the sideways track, due to the continuation of the main indicators’ contradiction, especially by stochastic reach to 50 level, which forces it to delay the bullish attack and hold near the moving average 55 at $1382.00 level.

The stability of the price above the support at $1355.00 is important for confirming the continuation of the positivity, to keep waiting for gathering the positive momentum, to ease the mission of surpassing $1400.00 level, then begin recording the targets at $1422.00 and $1435.00.

The expected trading range for today is between $1370.00 and $1422.00

Trend forecast: Bullish

The EURJPY pair formed new bullish rally, to record the initial extra target at 174.25, then bounced quickly to retest the breached barrier, which represents a new support at 173.40.

The suggested scenario depends on the stability of the current support, as the price stability makes us expect renewing the bullish attempts to target new positive stations that begin at 175.20, while facing negative pressures and reaching below this support will increase the chances for activating the bearish correctional track again, which forces it to suffer some losses by reaching 172.80, followed by the support of the bullish channel at 171.15.

The expected trading range for today is between 173.40 and 175.20

Trend forecast: Bullish

• The GBP/USD outlook suggests mounting worries about the UK’s fiscal health.
• The UK public sector borrowed 83.8 billion pounds between April and August.
• The Bank of England kept interest rates on hold in the previous session.

The GBP/USD outlook suggests mounting worries about the UK’s fiscal health after data revealed a bigger-than-expected surge in public borrowing. Meanwhile, the dollar continued its recovery after the Fed cut rates as expected and said it would keep assessing inflation risks.

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Data on Friday revealed that the UK public sector borrowed 83.8 billion pounds between April and August. The figure beat forecasts by 11.4 billion and raised concerns about a growing debt burden. It also puts additional pressure on Finance Minister Rachel Reeves to create a budget that appeases investors.

“The pound has sunk on this data, and is testing support at $1.35. It is the second-worst performing currency in the G10 FX space today,” XTB research director Kathleen Brooks said.

Meanwhile, the Bank of England kept interest rates on hold in the previous session. The central bank is facing a difficult challenge of balancing growth and inflation, which remains too high.

On the other hand, the Fed lowered borrowing costs on Wednesday as expected, but maintained that it would keep assessing inflation risks. As a result, the dollar has recovered from its lows, further weighing on the pound.

GBP/USD key events today

Market participants do not expect any high-impact economic releases from the UK or the US. Therefore, they will keep digesting key policy decisions.

GBP/USD technical outlook: Bears take charge below 30-SMA

On the technical side, the GBP/USD price trades well below the 30-SMA with the RSI on the verge of dipping into the oversold region. The bearish bias strengthened after the price broke below the 30-SMA and the 1.3575 key support level. However, bears must confirm the new trend by respecting the 30-SMA as resistance.

The previous bullish trend had developed well, respecting the 30-SMA as support and making higher highs and lows. However, this changed when the price briefly punctured the 1.3701 resistance and was rejected. The large top wick was a sign that bears had gained momentum. They confirmed this by pushing below the 30-SMA.

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If the new downtrend continues, GBP/USD will get a chance to retest the 1.3350 support level. A break below this level would solidify the bearish bias.

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Created on September 19, 2025

• The US dollar has rallied a bit against the Japanese yen during the trading session here on Thursday as we have broken above the 50 day EMA.
• The market is currently between the 200 day EMA and the 50 day EMA indicators. And it is in the middle of a consolidation area that has been very well defined.
• With the 146 yen level offering support and the 149 level above offering resistance, this is a market that I think continues to see a lot of back and forth.

But keep in mind that we have the Bank of Japan meeting early on Friday, so pretty much anything’s possible. I believe at this point in time, this is a market that stays in this range, but you never know, the Japanese could do or say something that rattles the markets.

If We Break Out

If we can break above the 149 yen level, then the implied move is to the 152 yen level. But I do think that the 151 yen level probably offers a little bit of resistance as well based upon that huge wipeout candle that got us down into this range to begin with.

If we were to break down below the bottom of the hammer from the session on Wednesday, that would be an extraordinarily negative turn of events probably opening up a move to the 144 yen level. Ultimately though, you get paid to hang on to this pair to the upside, even though the FOMC cut rates. And that of course is something that people will have to keep in mind.

A lot of people are attracted to an investment opportunity. So, with all of that being said, I still lean to the upside here, but I recognize the next 24 hours probably are going to be noisy.

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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.

– Written by


Ben Hughes

STORY LINK Euro to Dollar Forecast: Fed Triggers EUR/USD Spike Before Sharp Reversal

The Federal Reserve delivered a widely expected 25bp rate cut on Wednesday and signalled more easing ahead, but the dollar staged an impressive recovery from three-year lows.

The Euro to Dollar exchange rate (EUR/USD) briefly spiked above 1.1900 to hit fresh four-year highs before reversing sharply lower as US yields rebounded.

EUR/USD Forecasts: Euro Spikes Then Retreats

EUR/USD dipped to 1.1780 in early Europe on Thursday before clawing back to 1.1830.

ING noted;

“We suspect this reversal had more to do with positioning rather than a less dovish re-assessment of today’s communication from the Fed.”

UoB commented;

“Shorter-term upward momentum is starting to fade, but overall, as long as 1.1760 holds, there is still a chance, albeit not a high one, for EUR to rise toward 1.1955. Today, we expect EUR to trade in a range between 1.1785 and 1.1865.”

Despite the pullback, many banks continue to forecast medium-term EUR/USD gains to 1.20.

The Fed cut rates to 4.25% in an 11–1 vote, with new governor Steve Miran dissenting in favour of a 50bp move. Bowman and Waller, who had opposed easing in July, supported the smaller cut this time.

The updated dot plot showed a median projection of two more cuts in 2025, though only a slim majority backed that view, with six policymakers seeing no further easing this year. The median also pencilled in two more cuts in 2026.

Chair Powell defended the decision as “insurance” against labour market weakness, stressing;
“Recent indicators suggest that economic activity has continued to expand at a solid pace, but job gains have slowed and the unemployment rate has moved up somewhat.”

Powell also admitted the Fed faced “an uncomfortable balance” as inflation remains above target even as the jobs market softens.

Westpac’s Elliot Clarke highlighted the uncertainty;

“The revised forecasts highlighted the degree of uncertainty that remains over the outlook.”

Rabobank said;

“We now forecast another 25bp cut at the October 29 meeting and still see a terminal Fed Funds rate of 3.00%. The risk to our view is skewed to two more cuts this year over none, due to the rapidly deteriorating state of the U.S. labour market.”

ING added;

“A Fed formally shifting the risk on its dual mandate to the downside because of a softer jobs market and the expectation of two further rate cuts this year and a path to 3.00–3.25% for the policy rate do not look particularly dollar positive for us. And when the dust settles over coming days, we suspect the dollar could drift back to the lows of the year and now will prove hyper-sensitive to US labour market data.”

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TAGS: Euro Dollar Forecasts

• Pound capped by Bailey’s dovish remarks after BoE keeps Bank Rate at 4% amid inflation concerns.
• BoJ expected to hold rates steady after data showed slower growth, though GDP figures confirm ongoing expansion.
• Technicals point to consolidation, with key resistance at 201.50 and support seen around 199.50–198.90 levels.

The GBP/JPY prints back-to-back bullish candles, posting solid gains of 0.11% on Thursday, though it remains shy of re-testing the current year-to-date (YTD) high of 201.72.

Traders digested the Bank of England’s decision to hold rates, though a dovish tilt by the BoE’s Governor Andrew Bailey, capped the British Pound advance.

Conversely, the Bank of Japan is expected to hold rates on today’s meeting, as the bank’s paused its hiking cycle as data revealed that growth slowed. Nonetheless, recent GDP figures showed that the economy continues to grow.

GBP/JPY Price Forecast: To consolidate, within a 130-pip range

From a technical perspective, the GBP/JPY remains poised to extend its gains, but in the short term it could consolidate within the 200.04-201.30 range. The Relative Strength Index (RSI) is bullish, but it has turned flattish. This indicates that neither buyers nor sellers have the upper hand.

If GBP/JPY climbs above 201.00, the next resistance would be 201.50 before challenging the yearly high at 201.72. On further strength, the next area of interest would be 204.23, July 24, 2024, peak.

Conversely if the cross-pair slumps below 200.00, the first support would be the 20-day SMA at 199.49, before testing the 50-day SMA at 198.91. A breach of the latter will expose the August 29 low of 197.94.

GBP/JPY Price Chart – Daily