I wrote on 7^th September that the best trades for the week would be:

1. Long of the S&P 500 Index if we saw a daily (New York) close above 6,515. This set up Tuesday, and from there over the rest of the week the price rose by 0.91%.
2. Long of Gold or following a daily (New York) close above $3,500 for more cautious traders. Gold rose by 1.43% over the week.
3. Long of Silver or following a daily (New York) above $40 for more cautious traders. Silver rose by 3.05% over the week.

These trades produced an overall gain of 5.57%, equal to 1.86% per asset.

A summary of last week’s most important data:

1. US CPI – the month-on-month rate was a fraction higher than expected, at 0.4% instead of 0.3%, although the annualized rate reached 2.9% as expected. Despite the slightly higher rate, US stock markets gained following this data, and the US Dollar also declined.
2. US PPI- the data was much lower than expected, showing a month-on-month contraction of 0.1% while an increase of 0.3% was widely expected. This may have reinforced bullishness in US stock markets as it gave a tailwind to US rate cuts.
3. US Preliminary UoM Inflation Expectations – 4.8% as expected.
4. US Preliminary UoM Consumer Sentiment – this was lower than expected, with some analysts seeing the US heading into a period of “stagflation” where inflation remains elevated but growth collapses.
5. European Central Bank Main Refinancing Rate & Monetary Policy Statement – rates were kept on hold as expected.
6. UK GDP – zero growth, as expected.
7. US Unemployment Claims – worse than expected, at 263k about 30k higher than the consensus forecast.

A narrative of slowing growth in the USA is building.

There was more directional volatility than has been usual over recent weeks. Perhaps the Forex market is starting to wake up.

There were record highs in Gold and in the major US stock market indices the S&P 500 and the NASDAQ 100, and a 14-year high in Silver. The US economy is seen as starting to weaken, and this has boosted the market’s expectation of Fed rate cuts at its next meetings. Markets now see a 100% chance of a cut in September, an 85% chance of a cut in October, and a 79% chance of a cut in December – a bit higher than the sentiment this time last week. There is even a minority expecting a 0.50% rate cut at the next meeting later this calendar month. These expectations are dovish and should logically weaken the US Dollar over the coming weeks, in line with the Greenback’s long-term bearish trend, and strengthen US stock markets, in line with that bullish trend.

This is likely to be a good time to trade or invest.

The coming week will almost certainly be busier, because there are four major central bank policy meetings, as well as some other key data including inflation readings. This is likely to produce a further increase in volatility, building on last week’s increase.

This week’s important data points, in order of likely importance, are:

1. Federal Reserve Policy Meeting
2. Bank of Japan Policy Meeting
3. Bank of England Policy Meeting
4. Reserve Bank of Canada Policy Meeting
5. US Retail Sales
6. UK CPI
7. Canadian CPI
8. US Unemployment Claims
9. New Zealand GDP
10. Australian Unemployment Rate

It is a public holiday in Japan on Monday.

For the month of September 2025, I forecasted that the EUR/USD currency pair will rise in value if we get a daily close above $1.1806.

This has not yet set up.

I made no weekly forecast last week.

There were no unusually large price movements in currency crosses last week, so I have no weekly forecast this week.

The Australian Dollar was the strongest major currency last week, while the Japanese Yen was the weakest. Volatility was higher last week, with 26% of the most important Forex currency pairs and crosses changing in value by more than 1%. Next week’s volatility is likely to increase as we have four major central bank policy meetings, and at least two of them are expected to produce rate cuts.

You can trade these forecasts in a real or demo Forex brokerage account.

Last week, the US Dollar Index printed yet another bearish pin bar (the fourth consecutive one!), so we are now seeing extremely bearish price action, which is in line with the long-term bearish trend. Lower prices in the US Dollar look likely technically with all these repeated upper wics, however the price action is congested within its current area which may mean there is not much further downside to come. But a short-term fall is supported by more dovish market sentiment which arose last week following worse than expected US PPI data, even though the CPI data was a tick higher than expected.

Markets are now expecting rate cuts at each of the forthcoming Fed meetings remaining in this calendar year, with some even expecting a rate cut of 0.50% at the meeting this month. There is increasingly a feeling that the Fed has come to cutting rates a bit late. So. sentiment might be working with the trend and could trigger a downwards move now to the next support level at 94.61. We have a Fed meeting this week and a rate cut then is practically a certainty, so we might see Dollar action at or before this event.

I think it is wise to trade with the long-term trend and short-term price action right now, so trades short and not long of the US Dollar will probably be a good idea over the coming week.

The AUD/USD currency pair rose strongly last week, powering up to new 11-month high prices. It was the strongest weekly rise since June, and the price closed quite near its high. These are bullish signs.

The Australian Dollar has gained mostly as a risk proxy, with stock markets mostly rising and risk-on sentiment remaining bullish. It was the biggest-gaining currency of last week. The Aussie has also benefited from higher than expected inflation data recently which has effectively ruled out any rate cuts over the near term, and this has helped to increase its value.

On the other side of this pair, the US Dollar is in a long-term bearish trend and has shown bearish price action over recent weeks as it fails again and again to rise. Although there is little momentum lower, the price does look likely to break down and it is a valid trend.

For these reasons, I think there is further upside here, although it is important to be careful when trying to trend the Aussie as it tends not to trend very reliably. The key level to watch out for is probably $0.6654 – if we get a sustained break above that, we could see a further significant gain, as that is the initial strong technical obstacle. However, Wednesday’s Fed meeting might cause volatility which could send the price into unpredictable areas.

The S&P 500 Index had a great week, rising strongly and closing not far from the top of its range well into blue sky at a new record high, almost touching 6,600. The way the price was able to overcome the big round number at 6,500 was another bullish sign.

US stock markets are rising strongly due to increasing expectation that the Fed will make at least 0.75% worth of rate cuts over the rest of 2025, and on the bearish price action and trend we are seeing on the other half of this trade – the US Dollar.

The index has risen by about 10% since the start of 2025 and by 36% since the April low caused by the Trump tariff panic. It is an open question how much further the current bull run will go, but betting against new record highs in the US stock market is a brave and probably foolish move, unless it’s a cautious play in individual underperforming stocks.

I am bullish on the S&P 500 Index.

The NASDAQ 100 Index had a great week, rising strongly and closing very near the top of its range well into blue sky at a new record high, above 24,000. The way the price was able to overcome the big round number at 6,500 was another bullish sign, as was this tech index’s outperformance of the broader S&P 500 Index, while showing more bullish price action, too.

US stock markets are rising strongly due to increasing expectation that the Fed will make at least 0.75% worth of rate cuts over the rest of 2025, and on the bearish price action and trend we are seeing on the other half of this trade – the US Dollar.

The index has risen by about 14% since the start of 2025 and by 47% since the April low caused by the Trump tariff panic. These are above-average numbers, even in a bull market, especially the increase from April. It is an open question how much further the current bull run will go, but betting against new record highs in the US stock market is a brave and probably foolish move, unless it’s a cautious play in individual underperforming stocks.

I am very bullish on the NASDAQ 100 Index.

Silver had a stunning week, showing another outsize rise in value, again closing near the top of its weekly range, and powering up to a new 14-year high. It also outperformed Gold and all other precious metals. These are bullish signs, as is the general weakness in the US Dollar and that currency’s long-standing bearish trend on the other side of this trade, and the breakout from the linear regression analysis shown within the price chart below.

With Silver’s outperformance against Gold, it is probably worth being bold on the long side here.

Having said, if you are only just entering a new long trade here, as the move is quite extended, a smaller position size might be wise. Bulls might also be wary of the major quarter-number just ahead at $42.50.

I am very bullish on Silver.

Gold rose last week to print a new all-time high price just below $3,675. However, it is worth noting that Gold underperformed Silver, and left a bit of an upper wick on the weekly candlestick, as can be seen in the price chart below.

The long-term bullish trend and break to new record highs are bullish factors, as is the bearish trend in the US Dollar and the strong US stock market, as the US stock market has tended to be positively correlated with Gold, to the surprise of many who it as a hedge against inflation or whatever.

It may be that we are due a pullback, but I think the combination of rising stock markets and a likely more aggressive rate cutting approach from the Fed, could provide the bullish sentiment needed to drive this strong advance to even higher all-time high prices.

For anyone who is only entering a long trade now, it might be wise to use a smaller position size to account for any sudden high-volatility snapback towards lower prices.

I am bullish on Gold.

I see the best trades this week as:

1. Long of the S&P 500 Index.
2. Long of the NASDAQ 100 Index.
3. Long of Silver.
4. Long of Gold.

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– Written by


Frank Davies

STORY LINK Pound to Dollar Forecast: GBP Struggles at Resistance, USD Awaits Huge FED Risk

The Pound to Dollar (GBP/USD) exchange rate stalled below key resistance at 1.3590 on Friday after UK GDP data showed zero growth in July.

Sterling briefly touched 1.3580 in Asia but retreated towards 1.3550, with flat domestic growth and weak manufacturing tempering gains.

Dollar sentiment remains fragile after a sharp rise in US jobless claims, while markets are almost fully pricing a Fed rate cut next week against steady Bank of England policy.

GBP/USD Forecasts: Advance Stalls at Key Resistance

The Pound to Dollar (GBP/USD) exchange rate hit highs just above 1.3580 in Asia on Friday before a limited retreat to test support below 1.3550.

The immediate focus will still be on the key resistance area at 1.3590/1.3600.

Traders remain convinced that the Fed will cut interest rates next week with no change from the Bank of England while the wider economic debate continues.

Scotiabank notes that any break higher could trigger gains towards 1.38.

UoB commented; “A break above this level is not ruled out, but based on the current momentum, GBP is unlikely to be able to maintain a foothold above this level.”

The dollar was undermined on Thursday by a jump in US jobless claims which triggered fresh concerns over the labour market.

The ONS reported that UK GDP was unchanged in July after0.4% growth for June, in line with consensus forecasts.

The services sector recorded marginal growth for the month, but this was offset by a 0.9% retreat in industrial production.

Manufacturing output dipped to the lowest level since January with significant weakness in pharmaceuticals.

Deutsche Bank chief UK economist Sanjay Raja noted difficulties associated with tariffs; “as the US trade war catches up with the UK, global headwinds will gather pace, weakening the UK’s external backdrop”.

PwC chief economist Barret Kupelian added “Looking ahead, we may see a replay of last autumn’s script: private-sector firms paring back spending in the run-up to the Autumn Budget, creating a headwind for headline growth into year-end. This isn’t a cliff edge, but it is a gear change, at least for now.”

The latest Bank of England inflation expectations survey recorded an increase in long-term expectations to 3.8% from 3.6% in the May survey, the highest reading since 2019.

The combination of subdued growth and inflation concerns will trigger further difficulties for the Bank of England.

There are strong expectations that the Bank of England will leave rates on hold at 4.00% at next Thursday’s policy meeting.

ING commented; “September’s meeting almost certainly won’t result in another rate cut, with policymakers instead poised to keep rates at 4% on 18 September. But the prospect of a November cut hangs in the balance, and this meeting will be heavily scrutinised for hints on whether officials are still considering further easing this year.”

There are very strong expectations of a Fed rate cut next week with traders pricing in over a 90% chance of a 25 basis-point cut.

According to Danske Bank; “Markets have flirted with the idea of the Fed delivering a larger 50bp cut at the September meeting after disappointing jobs growth over the summer, but we still think a more gradual approach is better suited for the current environment.”

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EUR/USD Price Analysis: Bulls Eye 1.1830 as Fed Cut Cycle Looms and Lagarde Signals Confidence

Euro Regains Momentum Above 1.1700

EUR/USD is trading around 1.1733, recovering from repeated failures near 1.1780, a level that has capped upside attempts across September. Support zones at 1.1710 and 1.1660 remain in play, with buyers defending each dip as dollar momentum stalls. The move follows a bullish breakout from an inverse head-and-shoulders pattern and a bull pennant, both signaling that structural support for euro strength remains intact.

ECB Signals End of Disinflation, Shifting Policy Narrative

European Central Bank President Christine Lagarde stated the “disinflationary process is over”, suggesting the eurozone economy is stabilizing. The ECB has likely reached the end of its easing path, a stark contrast to the Federal Reserve preparing to cut rates. This divergence sets the tone for relative currency performance, giving EUR/USD bulls fresh conviction. Eurozone fundamentals remain fragile, but the absence of further ECB cuts supports the euro at a time when the dollar’s policy premium is fading.

Fed Policy Path to Define Dollar Weakness

Markets are pricing a 94% probability of a 25bp cut at the September 17 FOMC meeting, with expectations of three additional cuts into 2026. U.S. labor data has softened sharply, with jobless claims hitting 263,000 and the Bureau of Labor Statistics revising 911,000 jobs lower for the prior year. Nonfarm payrolls at 22,000 in August reinforced the view that U.S. growth is slowing. Inflation at 2.9% year-over-year remains sticky, but the market believes the Fed cannot maintain restrictive policy without risking recession.

Technical Landscape Points Toward Breakout

The near-term ceiling between 1.1780 and 1.1789 remains the critical breakout zone. A close above this region would expose the three-year high at 1.1830, a level that could trigger momentum buying. The 1.1748 Fibonacci retracement acts as interim resistance, while the 1.1710 zone offers short-term higher-low support. If EUR/USD breaks below 1.1660, it would disrupt bullish structure and shift the bias back toward a dollar-driven retracement. For now, the series of higher highs and higher lows supports continuation.

Speculative Positioning and CFTC Data

CFTC figures show net long euro positions rising to €125.7K contracts, up from €119.6K the prior week. This steady build reflects speculative appetite aligning with the technical backdrop. Dollar positioning has weakened across commodities and equities, reinforcing the narrative of a softer greenback into year-end.

Macro Events That Could Trigger Volatility

The upcoming FOMC meeting is the defining catalyst. A hawkish tone could delay EUR/USD’s breakout, while confirmation of a dovish path would accelerate euro gains. U.S. retail sales, the Empire State manufacturing survey, and weekly jobless claims remain key short-term drivers. On the European side, inflation indicators and PMI surveys will determine if Lagarde’s confidence holds weight or if eurozone weakness resurfaces.

Verdict on EUR/USD

Verdict: BUY — With EUR/USD defending 1.1700 and bulls positioned for a push toward 1.1830, the balance of technical and macro data favors further upside. Dollar weakness tied to labor cracks and Fed easing supports a bullish stance. Any sustained break above 1.1780–1.1789 unlocks a path to 1.1830, while downside invalidation sits at 1.1660.

That’s TradingNEWS

GBP/USD Under Fed Cut Pressure and UK Stagnation Risks

Sterling ended the week trading at 1.3556, slightly softer after hitting a daily high of 1.3580, as the US Dollar (USD) attempted to recover modest ground. The latest U.S. inflation figures showed CPI rising from 0.3% to 0.4% month-on-month, with the annual figure firm at 2.9%, confirming that prices remain elevated above the Fed’s 2% target. At the same time, U.S. unemployment claims rose unexpectedly, highlighting cracks in the labor market. These dual signals—sticky inflation but weaker jobs—pushed markets to fully price in a 25 bps Federal Reserve rate cut in the upcoming policy meeting. The pound capitalized on the weaker dollar tone, but lackluster U.K. macro data capped gains.

Labor Market and UK Growth Outlook Weigh on Sterling

The U.K. Office for National Statistics reported that GDP growth stalled in July after a 0.4% expansion in June, while factory activity softened. Traders remain cautious ahead of this week’s employment and inflation releases, which will determine whether the Bank of England (BoE) accelerates easing or continues its gradual approach. Current swaps price a 33% chance of another rate cut before year-end, but that probability will shift depending on wage growth data and retail sales momentum. Fiscal concerns have also pressured gilt markets, keeping a lid on sterling rallies despite broader dollar weakness.

Fed Policy Shift Dominates GBP/USD Sentiment

The GBP/USD (FX:GBPUSD) pair remains highly sensitive to Fed dynamics. With unemployment claims rising and CPI stable, traders see Wednesday’s Fed decision as pivotal. A dovish cut, paired with forward guidance pointing to more easing, could drive GBP/USD toward 1.3595 resistance and set up a test of the 1.3787 high. However, if the Fed signals a one-off adjustment without a full easing cycle, the dollar could stabilize, leaving sterling vulnerable to domestic weakness.

Technical Setup and Key Levels

Technically, GBP/USD trades above both its 200-day SMA at 1.3087 and the 50-day SMA at 1.3464, keeping the medium-term bias tilted upward. Momentum indicators lean bullish with RSI holding above 50, but price action shows repeated rejection near 1.3595, a swing high that capped rallies in August. A decisive break above would expose 1.3787, while failure here risks a retracement toward 1.3332 support. Deeper losses could test the 1.3200 region, a level that bulls defended earlier in the summer.

Comparisons with Dollar Index and Cross-Currencies

The U.S. Dollar Index (DXY) trades at 97.615, holding just above its support at 97.253. Its inability to reclaim the 50-day SMA at 98.121 confirms that broad dollar weakness is still a theme. EUR/USD holds steady at 1.1735, benefitting from the same dollar softness, while USD/JPY trades at 147.67, underpinned by yields. The pound’s relative outperformance hinges on U.K. releases, but against a weakening greenback, GBP/USD remains better positioned than sterling’s performance versus the euro or yen.

Forward Outlook and Volatility Triggers

The upcoming Fed meeting on Wednesday, coupled with U.K. labor market data, will define the near-term trajectory for GBP/USD. Traders will also track U.S. retail sales, as any sign of consumer slowdown could reinforce easing bets and weigh on the dollar further. If sterling clears 1.3595 resistance, markets will quickly shift to test 1.3787; a failure could pull the pair back into the 1.33–1.34 consolidation zone. With gilts under pressure and U.S. fiscal uncertainty climbing, volatility is expected to rise, making this week’s sessions highly consequential for positioning.

Buy, Sell, or Hold Verdict

At 1.3556, GBP/USD sits at an inflection point. With Fed cuts imminent, the dollar remains vulnerable, giving sterling a tactical advantage. However, the stagnant U.K. growth backdrop and fiscal concerns limit the longer-term bullish case. Near-term technicals argue for further upside if 1.3595 breaks, setting up a push to 1.3787, but the risk of a pullback into the 1.3332–1.3400 band remains high if resistance holds. Based on current conditions, GBP/USD carries a Buy bias in the short term, but only while Fed easing dominates. Should U.K. data weaken further, the pair risks flipping to a Hold as domestic headwinds reassert themselves.

That’s TradingNEWS

USD/JPY Battles 148.00 as Political Turmoil in Japan Weighs on the Yen

The USD/JPY pair closed the week trading at 147.58, staging a recovery after dipping to 146.29 earlier in the week. The move came as the resignation of Prime Minister Shigeru Ishiba injected political instability into Japan, clouding expectations around the Bank of Japan’s tightening path. With U.S. yields still holding firm and Japanese rates anchored near 0.5%, the widening policy divergence continues to favor the dollar, even as the pair remains locked between 146.00 and 149.00 since early August.

Political Uncertainty Complicates Bank of Japan Outlook

Ishiba’s sudden departure reshaped the landscape ahead of the October 4 leadership vote. Market chatter suggests a conservative replacement could revive rate hike speculation, sending USD/JPY lower toward 145.00, while a reflationary candidate could embolden BoJ doves, clearing the way for another test of 149.50–150.00. Current expectations for a BoJ rate hike by early 2026 have eased slightly, with Bloomberg consensus lowering the odds of an October move from 42% to 36%. Until clarity emerges, yen weakness is likely to persist, especially with inflation easing from 4.0% in January to 3.1% in July, reducing urgency for near-term hikes.

Fed Policy and U.S. Data Shape Dollar Demand

Across the Pacific, the Fed’s next move is pivotal. Markets are pricing a 25 bps cut at next week’s meeting, with a further 50 bps by year-end as job growth falters. The U.S. economy added just 22,000 jobs in August, averaging 29,000 over three months, well below the 100,000 needed to hold unemployment steady. With the unemployment rate at a four-year high of 4.3%, the Fed has scope to ease, though inflation at 3.1% y/y still sits above the 2% target. A dovish Fed could drag the dollar lower, but unless cuts are deeper than expected, yield spreads remain decisively in the greenback’s favor.

Joint U.S.–Japan Statement Reinforces Market Stability

Finance Minister Katsunobu Kato and U.S. Treasury Secretary Scott Bessent reaffirmed that FX levels should be market-determined and that sharp volatility is undesirable. The statement underscored policymakers’ preference for stability, but with political upheaval at home and a yawning yield gap, traders are betting volatility will persist. The message capped USD upside briefly, but failed to generate lasting yen support.

Consumer Sentiment and U.S. Dollar Index Trends

The University of Michigan’s Consumer Confidence Index, due later, is expected at 58, marginally below August’s 58.2. A sharp downside surprise would reinforce dovish Fed bets and weigh on USD/JPY, potentially dragging the pair back to 146.30 support. However, the DXY index climbed 0.2% on Friday, suggesting dollar demand remains resilient. A rebound toward 98 in the DXY would likely push USD/JPY to retest 148.60 resistance.

Technical Picture: Neutral Bias but Key Levels in Play

Technically, the bias in USD/JPY remains neutral as long as the pair holds below 149.12 resistance. A firm break under 146.29 confirms that the rebound from 139.87 has already topped at 150.90, opening a projection target of 144.42. On the upside, a sustained move through 149.12 sets the stage for another run at 150.90, with longer-term upside capped near 161.94, last year’s high. Indicators show RSI steady above 50, MACD near the zero line but edging positive, and price action still above the 200-day SMA, signaling underlying dollar strength.

Industrial Output, Trade, and Inflation Pressures in Japan

Japan’s July industrial production fell 1.6% month-on-month, erasing part of June’s 2.1% rise, a setback that weakens the case for immediate BoJ tightening. Declining output risks undermining wage growth and consumer spending, further complicating inflation dynamics. While imported inflation remains a concern due to yen weakness, the overall downward trend in domestic prices is giving the BoJ little urgency to tighten prematurely. Still, former policymakers warn that rates are “too low,” and the risk of imported inflation could push the bank to reconsider in 2026.

Volatility Ahead of Fed and BoJ Decisions

With the Fed meeting set for September 17 and the BoJ decision on September 18–19, USD/JPY traders face a high-volatility stretch. A dovish Fed combined with a hawkish BoJ could drive the pair toward 145.00, while the opposite mix—hawkish Fed commentary and dovish BoJ signals—would likely push USD/JPY back above 149.50 and potentially 150. For now, the broad range between 146.00 and 149.50 holds, but the election outcome and rate policy divergence mean breakout risks remain elevated.

Buy, Sell, or Hold Verdict on USD/JPY

At 147.58, USD/JPY remains a battle between political uncertainty in Japan and monetary divergence with the U.S. Elevated U.S. yields, a 4%+ Fed funds rate, and weakening Japanese growth argue for continued yen weakness unless the BoJ signals an earlier rate hike. With support anchored at 146.30 and resistance at 149.12–150.00, the risk-reward leans bullish in the near term. Based on current fundamentals and technicals, USD/JPY is a Buy above 147.00, targeting 148.60–149.50, with downside risks emerging only if Fed cuts accelerate or Japan’s political outcome strengthens hawkish BoJ expectations.

That’s TradingNEWS

• The GBP/USD weekly forecast suggests further upside for the pound.
• The US CPI report revealed that inflation accelerated from 0.3% to 0.4%.
• US unemployment claims were higher than expected, supporting Fed rate cut bets.

The GBP/USD weekly forecast suggests further upside for the pound as traders gear up for a Fed rate cut on Wednesday.

Ups and downs of GBP/USD

GBP/USD ended the week higher as the dollar fell ahead of an expected Fed rate cut. US data during the week pointed to a spike in inflation. However, unemployment was also high.

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The US CPI report revealed that inflation accelerated from 0.3% to 0.4% monthly. Meanwhile, the annual figure accelerated to 2.9% as expected. However, traders were more focused on a separate report showing a jump in unemployment claims. It highlighted the weakness in the labor market, keeping Fed rate cut bets elevated. As a result, the dollar declined, allowing the pound to rally.

Next week’s key events for GBP/USD

Next week, market participants will pay attention to data from the UK, including employment, inflation, and retail sales. Meanwhile, the US will release its retail sales report and the Fed will hold its policy meeting on Wednesday.

UK data will show the state of growth and inflation, which will shape the outlook for Bank of England rate cuts. Meanwhile, traders expect the Fed to lower borrowing costs by 25-bps after recent data revealed a rapid decline in the US labor market.

GBP/USD weekly technical forecast: Bulls eye the 1.3803 resistance

On the technical side, the GBP/USD price has reversed its recent decline to start trading above the 22-SMA, with the RSI above 50. However, although the bias has turned bullish, bulls are yet to confirm a new trend with higher highs and lows. Instead, they are struggling to break above the 1.3575 resistance level.

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GBP/USD has had a strong bullish run, mostly keeping above the 22-SMA. However, this trend paused when it got near the 1.3803 level. At this point, bears took over by pushing the price below the 22-SMA. At the same time, the RSI dipped below 50 to support bearish momentum. However, the decline could not go beyond the 1.3200 support. As a result, bulls took over, pushing the price back above the SMA.

Now, they must break above the 1.3803 resistance to continue the previous rally. If they fail a second time, bears could return stronger to try to reverse the trend.

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The GBP/USD exchange rate held steady as investors reacted to the latest UK inflation expectation and GDP numbers. It was trading at 1.3537, as focus now shifts to the upcoming Bank of England (BoE) and Federal Reserve interest rate decisions. It has risen by about 12% above the lowest level this year.

UK publishes GDP and inflation data

The GBP/USD exchange rate remained unchanged after the UK published relatively weak economic numbers. A report by the Office of National Statistics (ONS) showed that the economy stagnated in July after growing by 0.4% in the previous month.

Another report revealed that the country’s manufacturing production dropped by 1.3%  after growing by 0.5% in the previous period. Further, the industrial production softened by 0.9%, down from an expansion of 0.7% in the previous month.

Meanwhile, UK household inflation expectations continued soaring in a major setback for the Bank of England. 

A report by the BoE found that the headline Consumer Price Index (CPI) will rise to 3.6% in the next 12 months, up from the previous atr3.2%. These expectations are the highest they have been since 2019. In a note, Robert Wood, an analyst from Pantheon Macroeconomics, said:

“Inflation running nearly double the target and households expecting that to continue poses a trickier backdrop for the crucial pay settlements period later this year than we saw in 2024.”

Therefore, there are concerns that the UK is currently in a stagflation period, which is characterized by high inflation and slow economic growth. It is normally a central bank’s worst nightmare since interest rate hikes to lower interest rates would affect economic growth.

Therefore, economists expect that the Bank of England will leave interest rates unchanged next week. 

Federal Reserve interest rate cuts ahead 

The GBP/USD exchange rate also reacted to the latest consumer and producer inflation data.

A report by the Bureau of Labor Statistics (BLS) showed that the Producer Price Index (PPI) dropped from 3.1% to 2.6%, while the core PPI moved from 3.4% to 2.8%.

Meanwhile, another report by the BLS showed that the headline CPI rose from 2.7% to 2.9%, while the core CPI remained unchanged at 3.1%.

These numbers came a week after data showed that the economy created just 22,000 jobs, while the unemployment rate rose to 4.3%. Still, analysts expect the Fed will cut interest by 0.25% in its next meeting.

“On the face of it, this hints at a pick-up in the pace of lay-offs in an environment of already weak hiring and will re-affirm expectations of a 25bp Fed rate cut next week.”

GBP/USD technical analysis

The daily timeframe chart shows that the GBP/USD pair rose from a low of 1.2102 in January to 1.3535 today. It has moved above the 23.6% Fibonacci Retracement level at 1.3395. 

The pair has moved above the 50-day and 25-day Exponential Moving Averages (EMA), a sign that bulls are in control. It has formed an inverse head-and-shoulders pattern.

Therefore, the pair will likely have a bullish breakout, potentially to the year-to-date high of 1.3795, up by about 1.92% from the current level.

The post GBP/USD forecast ahead of Fed and BoE inflation data appeared first on Invezz

• The GBP/USD price analysis shows market focus returning to the looming Fed rate cut.
• Data on Thursday revealed that US consumer inflation increased by 0.4%.
• US unemployment claims jumped to 263,000, well above estimates of 235,000.

The GBP/USD price analysis shows the pound recovering as focus returns to the looming Fed rate cut. The sterling had dropped in the previous session as the US dollar rose after upbeat inflation figures. However, unemployment claims data raised more alarm about the labor market, solidifying bets for a rate cut.

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The dollar rose after data on Thursday revealed that US consumer inflation increased by 0.4%, compared to the forecast of 0.3%. Meanwhile, on an annual basis, inflation increased by 2.9% as expected. Though the numbers pointed to accelerating price pressures, it was not enough to dampen Fed rate cuts.

Meanwhile, unemployment claims jumped to 263,000, well above estimates of 235,000. The number highlighted the rising unemployment, putting pressure on the Fed to lower rates.

Elsewhere, traders are still focused on the UK’s fiscal health, with the next budget coming at the end of November. Another bond market turmoil could weaken sterling.

“Rising government borrowing costs, in the form of higher yields on its bonds, or gilts, mean Rachel Reeves will want to put together a tax-and-spending plan that appeases bond vigilantes,” Russ Mould, AJ Bell investment director, said in a note.

GBP/USD key events today

• Preliminary University of Michigan Consumer Sentiment
• Preliminary University of Michigan Inflation Expectations

GBP/USD technical price analysis: Bulls struggle to confirm channel breakout

On the technical side, the GBP/USD price has pulled back to retest he recently broken channel resistance. Moreover, bulls are struggling to make a new high that would confirm the breakout. The price has pulled back to retest the 30-SMA, and the RSI trades above 50, supporting bullish momentum. However, bulls are facing solid resistance at the 1.3575 level.

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Previously, GBP/USD was trading in a bearish channel, making lower highs and lows. However, this changed when there was a surge in bullish momentum that allowed the price to break above the channel resistance. As a result, it made a higher high, breaking the previous pattern.

However, bulls must now break above the 1.3575 resistance to confirm the channel breakout and start a bullish trend. On the other hand, if the resistance holds firm, bears might regain enough momentum to push the price below the 30-SMA and back into the channel.

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USD/JPY Technical Analysis

The US dollar has rallied quite nicely during the trading session here on Friday, as we are now testing the 200 day EMA. All things being equal, this is a market that I think will continue to stay in the same range that we’ve been in, with 146.50 yen on the bottom offering support and the 149 yen level on the top offering resistance. We’re basically just stuck in the middle here.

AUD/USD Technical Analysis

The Australian dollar is pulling back a bit, but I have to say out of the three charts, this is probably the most bullish looking chart. I didn’t think I would say that anytime soon because, quite frankly, the Australian dollar has been a major laggard. I would anticipate a pullback, maybe towards the 0.66 level, where, right around that area, I think you will start to see buyers come back in. Whether or not they can hold remains to be seen, but the Australian dollar rallying like this is a fresh new look because even when it was rallying for all those months against the US dollar, it was doing so very slowly, especially in comparison to other places like the British pound, the Canadian dollar, or even the euro.

So, with all of this, I have to ask questions of whether or not the Australian dollar is about to play catch up. We don’t know, but it certainly looks the most bullish of the three charts at the moment, which is a sudden change. 0.6550 level has been like magnet for price. So, we’ll have to see if that continues if we get a substantial pullback.

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

– Written by


Frank Davies

STORY LINK Euro to Dollar Forecast: Can EUR/USD Break 1.18 as Fed Cut Bets Grow?

The Euro to Dollar exchange rate (EUR/USD) rebounded to 1.1730 on Thursday as ECB President Christine Lagarde signalled the rate-cutting cycle may be over, lifting the single currency despite mixed US inflation and labour-market data.

Analysts expect EUR/USD to consolidate within the 1.1650–1.1750 range for now, with a sustained break above 1.18 only likely if the Fed accelerates rate cuts while the ECB holds firm.

EUR/USD Forecasts: Secure a Range Break?

The Euro to Dollar (EUR/USD) exchange rate briefly spiked higher after the latest US jobs data and then posted renewed gains as Lagarde’s hints of no further ECB rate cuts boosted the Euro.

EUR/USD advanced to 1.1730 from 1.1660 lows, but the question is whether the Euro can sustain gains and then break higher or whether the dollar will fight back again.

UoB commented; “Today, we expect EUR to trade in a range, most likely between 1.1675 and 1.1735.”

ING added; “For now, we are looking at a re-stabilisation in the 1.170-1.175 area in EUR/USD ahead of the weekend.”

Scotiabank added; “We look to a near-term range bound between 1.1650 and 1.1750.”

Commerzbank commented on the overall EUR/USD outlook; “It is only when it becomes clear that the Fed will deliver further significant interest rate cuts in the coming months while the ECB shows no signs of lowering interest rates further, and Donald Trump continues to undermine the Fed’s independence, that we are likely to break through the 1.18 level on a sustained basis.”

US consumer prices increased 0.4% for August after a 0.2% increase previously and compared with consensus forecasts of a 0.3% increase with the year-on-year rate increasing to 2.9% from 2.7%.

Core prices increased 0.3% on the month with the year-on-year rate remaining at 3.1% with both figures in line with expectations.

Elsewhere, initial jobless claims surged to 263,000 in the latest week from 236,000 previously which was above expectations of 235,000 and the highest reading since June 2023.

Following the data market fully priced in three interest rate cuts by the end of 2025.

The potential for a 50 basis-point cut next week also ticked higher to around 12%.

Commerzbank is backing a 25 basis-point cut and on a short-term view added; “it is more likely that EUR/USD will continue to trade within the fairly narrow range of 1.16–1.18.”

ING commented; “relatively benign CPI data could give the go-ahead to re-enter USD shorts that might have been partly held back ahead of the release.”

The ECB held the deposit rate at 2.00% at the latest policy meeting which was in line with strong consensus forecasts.

There was a slight increase in the 2025 and 2026 inflation forecasts, but this was offset by a slight downward adjustment for 2027.

The bank provided little in the way of formal forward guidance.

Bank President Lagarde was, however, more positive on the outlook with comments that the risks to economic growth are now more balanced.

Lagarde also commented that the disinflation process was over. In response, traders are no longer backing further rate cuts by the ECB.

Some investment banks were still cautious.

Capital Economics Deputy Chief Euro-zone Economist Jack Allen-Reynolds; commented; “The bank is unlikely to change interest rates again this year, but we think the risks are skewed towards renewed cuts in 2026.”

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