GBP/USD Forecast: Pound Sterling stays dangerously close to key support level

GBP/USD lost 0.3% last week and snapped a three-week winning streak. The pair enters a consolidation phase on Monday and trades below 1.3300.

GBP/USD closed virtually unchanged on Friday as the US Dollar (USD) struggled to gather strength following the April labor market data from the US. The Bureau of Labor Statistics (BLS) reported that Nonfarm Payrolls (NFP) increased by 177,000 in April. Read more…

GBP/USD Weekly Outlook: Pound Sterling awaits Fed-BoE policy decisions for fresh impetus

King Dollar regained its throne, booking the third weekly gain, due to receding tariff war fears and optimism emerging from potential trade deals between the United States (US) and its major Asian trading partners.

US President Donald Trump and some of his colleagues stuck to their rhetoric that trade negotiations continued with China even though Beijing dismissed such talks. Trump said during the week that he has “potential” trade deals with India, South Korea and Japan and that there is a very good chance of reaching an agreement with China. Read more…

• The USD/JPY outlook shows a stronger yen at the start of the week.

• The BoJ faces high food inflation, strong wage growth, and the possibility of a weak yen.

• US employers added 177,000 new workers, beating estimates of 138,000.

The USD/JPY outlook shows a stronger yen at the start of the week, as market participants maintain hopes for further BoJ tightening. Meanwhile, the dollar strengthened against the yen briefly on Friday after an upbeat US employment report. 

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The yen collapsed Thursday after the Bank of Japan kept interest rates unchanged. Furthermore, the central bank downgraded its outlook for growth and inflation due to the impact of Trump’s tariffs. Governor Ueda noted that Trump’s trade policies had created a lot of uncertainty. Experts took this to mean the policymakers would delay rate hikes. As a result, rate hike expectations dropped. 

However, Japan’s currency rebounded on Friday after the impact of the policy meeting faded. The BoJ has to face high food inflation, strong wage growth, and the chances of a weak yen. Therefore, hopes are still alive that policymakers will boost interest rates.

Meanwhile, the greenback got a brief boost from data showing a resilient labor market. The economy added 177,000 new workers, beating estimates of 138,000. The unemployment rate was unchanged at 4.2%. After the report, market participants priced a 35% chance of a June Fed rate cut, down from 58%. 

However, due to Trump’s tariffs, analysts expect employment to deteriorate in the coming months. 

USD/JPY key events today

USD/JPY technical outlook: Brief retreat meets solid support zone

On the technical side, bulls have found their footing above the 30-SMA. The trend recently reversed when bears failed to go below the 140.01 support level. The price broke above it resistance trendline and pulled back for a retest. After that, it made a higher high, confirming the new uptrend. 

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However, after a new high, the price has returned to retest the recently broken 144.02 key level. At the same time, it is trading nearer the 30-SMA, which is another support level. Still, the price is above the SMA and the RSI is slightly over 50, suggesting a bullish bias. 

Therefore, bulls might return at this support zone to seek new highs. A bounce higher will likely target the 148.01 resistance level. The trend will only change when the price breaks and stays below the SMA.

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The EURJPY pair is forced to form a bearish correctional rebound this morning, affected by the stability of the resistance at 164.80, suffering clear losses by its approach from the initial support at 163.25 level.

Providing positive momentum by stochastic might increase the efficiency of the negative track in the current period, to expect reaching below the initial support and begin targeting several negative stations by reaching 162.45 and 161.90, while the price rally above the mentioned resistance will reinforce the chances for regaining the bullish bias, to expect targeting 165.25 level, reaching the next target at 166.40.

The expected trading range for today is between 162.45 and 164.10

Trend forecast: Bearish

No change on Copper price’s temporary sideways trading, due to its confinement between the extra barrier at $4.6600, while the moving average 55 keeps forming a new support by its fluctuation near $4.5400, and stochastic attempt to provide positive momentum might assist delaying the negative trading in the current trading, to increase the chances for compensating the previous losses, by its rally above the current barrier and targeting 61.8%Fibonacci correction level at $4.8200.

Reaching below the support and providing a negative close will support the continuation of the suggested negativity, reminding you that the negative stations stability near $4.4500 and $4.3100 level.

The expected trading range for today is between $4.5300 and $4.6600

Trend forecast: Sideways

• The euro initially did try to rally a bit during the course of the trading session on Friday, but it looks as if the area near the 165 yen level could continue to be a bit of a barrier.
• That area is of course an area that has been important multiple times in the past. It’ll be interesting to see how this plays out.

We had the massive candlestick during the previous session that came into the picture to offer a lot of upward momentum. And then the pullback on Friday, which shows that we are not simply going to rip through the 165 yen level by breaking above there. Then we could go looking to the 166.50 level and therefore the swing high back in November. Short-term pullbacks from here make a certain amount of sense. And I think they offer buying opportunities because quite frankly, we are starting to see the Japanese yen suffer.

There is Support Below

In general, the 200 day EMA sits around the 162 yen level with the 50 day EMA sitting just underneath there. The 50 day EMA looks as if it is going to try to cross above there. And if it does, that is the so called golden cross, which a lot of traders look for a bit of inspiration to the upside. It’s a late indicator typically, but what I have found is that the Golden Cross tends to do much better than the opposite, the negative version of this called the Death Cross. We are going sideways. We are getting ready to try to break to the upside. And now the question is, will we have to pull back towards the movie and averages or will we clear 165 yen and then just simply rip to the upside.

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May 5, 2025 – Written by Tim Boyer

STORY LINK Pound to Dollar Forecast: Consolation Now, Longer-Term 1.43

Bank of America forecasts that the Pound to Dollar exchange rate (GBP/USD) will strengthen to 1.43 at the end of 2025 with a further advance to 1.54 at the end of next year.

HSBC has lowered its dollar outlook with the end-2025 dollar forecast at 1.32 from 1.23 previously.

GBP/USD hit 3-year highs just below 1.3450 during the week before a retreat to just below 1.3300.

Interest rate decisions will be a key element in the week ahead.

There are strong expectations that the Bank of England will cut interest rates by 25 basis points to 4.25% with expectations that a minority of MPC members will vote for a larger cut. Guidance from the bank will be crucial for the Pound.

Rabobank noted the possibility of dovish guidance, but added; “Given the potential for a hot April CPI print, the MPC may prefer to keep its options open and stick to its current guidance of careful and careful cuts. We therefore hesitate to call for a follow-up cut in June, but a cold CPI print could change that.”

According to ING; “The Bank of England is poised to cut rates at its 8 May meeting, and markets are pricing a faster pace of easing thereafter. We’re less convinced the Bank will deviate from its once-per-quarter cutting rhythm, but we do think it could cut rates to a lower level than investors are currently expecting.”

Rabobank is wary over overall UK fundamentals; “The UK’s current account deficit can leave GBP exposed when UK fundamentals are weak. Currently, soft growth and a high level of indebtedness in the UK will not endear the pound to investors.”

The bank also has a 12-month GBP/USD forecast of 1.32.

The Federal Reserve is not expected to cut interest rates on Wednesday with the Fed Funds rate held at 4.50%.

Markets see no real chance of a cut at this meeting while there is a 60% chance of a June move.

There will be no updated forecasts at this meeting.

Guidance from Chair Powell will be crucial for the dollar, especially given the strong political pressure from the US Administration.

The US labour-market data was slightly stronger than expected with an increase in non-farm payrolls of 177,000 for April and unemployment held at 4.2%.

GDP, however, contracted at an annualised rate of 0.3% for the first quarter while consumer confidence dipped further to 5-year lows with the expectations element at a 14-year low.

The extent of dollar confidence will be a crucial element with a focus on trade, Fed independence and capital flows.

HSBC commented; “There are questions about its structural properties that we have not had to take more seriously for some time. We do not believe there is enough evidence to fully embrace those concerns but we cannot discount them either. Putting these together tells us that the DXY will be in a softer position over the coming quarters.

It added; “We could see some reweighting back towards our previous USD framework that laid the grounds for a healthier USD. For now though, we are sailing away from the currency.”

SocGen notes the importance of data; “The lag between policy announcements and their impact on the US economy is however significant and the fall in the dollar (and US equity indices) is now pausing/correcting. It will resume when/if economic data confirm market fears that the US is in for a period of slower growth and higher inflation.”

Standard Chartered commented; Our baseline expectation is that the USD will be slightly weaker versus current spot but basically stable through year-end. The US administration seems to be making its most determined effort in months to reassure markets on tariffs and other policies. But even after the administration’s positive announcements on tariff progress and equity market gains, the USD has not traded very firmly.”

It added; “This makes us think that the adjustment of USD positions is continuing and could take the USD a bit lower.”

The bank has increased its end-2025 GBP/USD forecast to 1.35 from 1.26.

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• Tepid US growth was partially overshadowed by encouraging employment data and trade tensions relief.
• The European Central Bank maintained its dovish stance despite modest economic progress.
• EUR/USD seems to have completed its bearish corrective slide and may soon resume its bullish run.

The EUR/USD pair stayed under mild selling pressure for the second consecutive week, but settled on Friday at around 1.1350, pretty much unchanged from the opening. Investors are still wary about the US Dollar (USD) given the White House’s tariffs policy potential effects on the local economy.

Additionally, United States (US) data released in the last few days indicated a slowing performance throughout the first quarter of the year, also a result of trade-war concerns. On the contrary, European Union (EU) macroeconomic figures were unimpressive but painted a better picture.

As the week comes to an end, investors shift the focus to global trade developments and the upcoming Federal Reserve (Fed) monetary policy announcement.

European data and the European Central Bank

The EU released the April Economic Sentiment Indicator, which contracted to 93.6 from 95.00 in March. Additionally, the Union released the preliminary estimate of the Q1 Gross Domestic Product (GDP), indicating the economy grew by 1.2% on a yearly basis and by 0.4% in the quarter, beating expectations of 1.0% and 0.2%, respectively. Finally, the Harmonized Index of Consumer Prices (HICP) rose by more than anticipated in April, according to preliminary estimates, up 2.2% year-on-year (YoY) vs the 2.1% expected.

Meanwhile, Germany released March Retail Sales, down on a monthly basis by 0.2%, better than the -0.4% anticipated by market players. The German Q1 (GDP) showed the economy grew 0.2% in the quarter, according to preliminary estimates. The figure matched expectations, while improving from the Q4 2024 reading of -0.2%. Inflation in the country, as measured by the HICP, increased by 2.2% year-on-year (YoY), down from the previous 2.3% but above the 2.1% expected.

Tepid EU data kept the door open for additional rate cuts. European Central Bank (ECB) officials delivered dovish messages, supporting the case for another 25 basis points (bps) rate cut when they meet in June.

Among others, ECB policymaker Olli Rehn stated on Monday that the central bank may need to lower interest rates below the neutral level to support the economy, given materializing downside risks. He even called for larger interest rate cuts. Also, ECB Philip Lane noted he would not pre-commit to any path and said the growth forecast would see only a moderate markdown.

A fragile economy and persistent trade tensions leave no room for anything other than further cuts.

US economy shrinks, employment fails ahead of Fed

Unimpressive US data limited USD advances despite the de-escalation of global trade tensions.

Consumer Confidence, as measured by CB, fell to 86 in April, its lowest since October 2021. Also, the preliminary estimate of the US Q1 Gross Domestic Product (GDP) also missed expectations, as the economy contracted at an annualized pace of 0.3% against the anticipated 0.4% expansion, and sharply down from the previous 2.4%. The April ISM Manufacturing Purchasing Managers’ Index (PMI), on the contrary, posted 48.7, down from the 49 posted in March, but better than the 48 expected.

Inflation in the US, as measured by the change in the Personal Consumption Expenditures (PCE) Price Index, edged lower to 2.3% on a yearly basis in March from 2.5% in February. The figure missed expectations of 2.2%. The core annual PCE Price Index rose 2.6%, down from the 3% increase reported in February and in line with analysts’ estimates.

Employment-related figures were tepid, although the April Nonfarm Payrolls (NFP) report brought a positive surprise ahead of the weekly close.

Earlier in the week, the US released the April ADP Employment Change report, which showed that the private sector added measly 62K new job positions, much worse than the 108K expected, while below the previous 147K. Also the number of job openings in the country on the last business day of March stood at 7.19 million, as reported in the Job Openings and Labor Turnover Survey (JOLTS), easing from the previous 7.48 million openings (revised from 7.56 million) reported in February and below the market expectation of 7.5 million. Finally, Initial Jobless Claims for the week ended April 26 rose by 241K, worse than the 224K anticipated and the previous weekly figure of 223K.

On Friday, the NFP showed the country added 177K new job positions in April, surpassing the expected 130K and not far from the 185K posted in March. The Unemployment Rate held steady at 4.2% as expected, while annual wage inflation, as measured by the change in the Average Hourly Earnings, held steady at 3.8%, below the 3.9% expected.

Federal Reserve taking centre stage

The macroeconomic calendar has little relevant to offer in the upcoming days. The US will release the April Services PMI, foreseen at 50.6, down from the March reading of 50.8. As for the EU, the focus will be on Germany Factory Orders, seen increasing by 2.2% in March, and EU Retail Sales for the same period.

The Fed will gather all the attention, announcing the monetary policy decision on Wednesday. Fed officials are widely anticipated to keep the benchmark interest rate on hold this time, floating between 4.25% and 4.50%. Uncertainty related to trade tensions translates into potentially higher inflation coupled with a slowdown in economic activity, forcing policymakers to stay put ahead of a clearer picture emerges.

Chairman Jerome Powell is expected to repeat the need to wait and see, with the focus on progress towards the 2% inflation goal. Questions about his relationship with President Donald Trump within the press conference are likely, yet Powell will likely dodge those as usual.

Trump trade war developments

In the meantime, global trade tensions continue, impacting the market’s mood. Headlines were mostly discouraging throughout the first half of the week, as headlines coming from China indicated no negotiations were underway. As days went by, back and forth between Washington and Beijing continued, with both sides waiting for the opposite one to take the first step, something that has not yet happened.

Still, comments from Trump pointing to ongoing negotiations with other major trade counterparts brought some relief to financial markets. On Thursday, US President Trump noted progress on talks with some Asian countries, including India and Japan. Regarding China, Trump stated that there’s a “very good” chance of making a deal with China, yet added that any deal with Beijing has to be in US terms. Meanwhile, a Beijing-backed outlet reported that United States officials have contacted their Chinese counterparts for talks.

Finally, White House trade advisor Peter Navarro down-talked data, saying, “I got to say just one thing about today’s news, that’s the best negative print I have ever seen in my life,” while saying he likes “where we’re at now.”

The mood improved ahead of the weekly close thanks to the optimism related to such headlines.

EUR/USD technical outlook

The weekly chart for the EUR/USD pair shows extreme conditions continue to recede, while the bearish potential seems well-limited. Technical indicators retreated from their recent highs, but remain within overbought territory, with the Relative Strength Index (RSI) indicator consolidating around 70. At the same time, the pair develops above all its moving averages, with a bullish 20 Simple Moving Average (SMA) extending its advance below the 100 and 200 SMAs. The longer one stands at around 1.0830, which is too far away to be considered a relevant support, yet at the same time, it reflects EUR/USD bullish momentum.

The daily chart shows EUR/USD bounced from a bullish 20 SMA currently at around 1.1300. The 100 and 200 SMAs grind north over 500 pips below the current level, in line with the dominant bullish strength. Finally, technical indicators are stuck around their midlines, barely bouncing while losing the bearish strength from the previous sessions. Overall, it seems the downward correction is complete and EUR/USD may soon resume its upward strength.

Immediate resistance can be found at around 1.1400, followed by the 1.1470 region, ahead of the yearly peak at 1.1573. A clear break below the latter should see EUR/USD extending gains well beyond the 1.1600 mark. Support, on the other hand, comes at around 1.1300, followed by the 1.1260 price zone. A break below the latter could open the door for a decline towards the 1.1160/70 price zone.

• The GBP/USD weekly forecast shows a strong US labor sector.

• US jobs data pointed to a faster-than-expected economic decline.

• The US added 177,000 new jobs in April.

The GBP/USD weekly forecast is slightly bearish as strong US labor sector validates the Fed’s cautious tone.

Ups and downs of GBP/USD

The GBP/USD price ended the week down after climbing to new highs. Initially, the pound rallied against the dollar amid downbeat US economic data. However, this changed after robust employment figures at the end of the week. 

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US figures on job vacancies, pirate employment and jobless claims pointed to a faster-than-expected economic decline. However, business activity in the manufacturing sector was better than expected. Moreover, the nonfarm payrolls report revealed 177,000 new jobs in April compared to estimates of 138,000.

Next week’s key events for GBP/USD

Next week, market participants will focus on the Fed and Bank of England policy meetings. Economists expect the Fed to keep interest rates unchanged, while the Bank of England will likely cut rates by 25-bps. 

The Fed has maintained a cautious tone, with Powell saying there was no hurry to cut interest rates. However, recent downbeat economic data might push the central bank in June. Meanwhile, the BoE is aware of the likely impacts of Trump’s tariffs. Weaker global and UK growth will likely push policymakers to consider a faster easing cycle.

GBP/USD weekly technical forecast: Uptrend pauses after recent swing high

On the technical side, the GBP/USD price has paused after reaching the 1.3401 key resistance level. Moreover, the price trades above the 22-SMA and the RSI is above 50, suggesting a bullish bias. GBP/USD has maintained a bullish trend, making higher highs and lows. At the same time, the price has respected a trendline as support. 

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The most recent swing started at the support trendline and the 1.2702 level. However, the move slowed near the 1.3401 level. Bulls tried twice to break above the level but failed. Meanwhile, the RSI made a slight bearish divergence, signaling a looming pullback.

The price might be ready to retest the 22-SMA. A deeper retreat would retest the support trendline. The bullish bias will remain if the price stays above the SMA or the trendline. Meanwhile, the uptrend will continue with a break above the 1.3401 resistance.

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• The Pound Sterling faced rejection again near 1.3450 versus the US Dollar.
• The Fed and BoE policy announcements are set to rock the GBP/USD pair in the week ahead.
• Technically, the pair could see dip-buying as the daily RSI still holds above the midline.

The Pound Sterling (GBP) witnessed a downside correction against the US Dollar (USD) after the GBP/USD pair faced rejection again near the 1.3450 barrier.

Pound Sterling hit three-year highs, then reversed

King Dollar regained its throne, booking the third weekly gain, due to receding tariff war fears and optimism emerging from potential trade deals between the United States (US) and its major Asian trading partners.

US President Donald Trump and some of his colleagues stuck to their rhetoric that trade negotiations continued with China even though Beijing dismissed such talks. Trump said during the week that he has “potential” trade deals with India, South Korea and Japan and that there is a very good chance of reaching an agreement with China.

China eventually confirmed in the latter part of the week, with the Chinese Commerce Ministry stating that “the US has recently sent messages to China through relevant parties, hoping to start talks with China. China is currently evaluating this.”

Optimism on the trade front allayed fears of a likely slowdown in the US economic growth, keeping the USD recovery intact. The first look of the US annualized Gross Domestic Product (GDP) showed on Wednesday that the US economy contracted by 0.3% in the first quarter of 2025 as US firms frontloaded to get ahead of the US levies, resulting in an import surge.

However, Thursday’s ISM Manufacturing PMI eased US growth concerns. The index fell to 48.7 in April from 49.0 in March, against expectations for a bigger fall to 48. 

Therefore, the sustained USD demand remained the primary driver behind the GBP/USD pair’s moves as the Pound Sterling finally gave in to the Greenback’s resurgence. The pair hit a fresh three-year high at 1.3445 at the start of the week before setting off a correction to near 1.3250 heading into the release of the US employment report on Friday.  

The US Bureau of Labor Statistics (BLS) reported that Nonfarm payrolls (NFP) rose by 177,000 in April, surpassing the market expectation of 130,000. In this period, the Unemployment Rate held steady at 4.2% and annual wage inflation, as measured by the change in the Average Hourly Earnings, remained unchanged at 3.8%. GBP/USD struggled to gain traction after the US labor market data and remained in the lower half of its weekly range heading into the weekend.

Focus on trade headlines and central banks’ bonanza

Following a US economic data-dominated week, the upcoming week is relatively light, notwithstanding the Fed and BoE monetary policy decisions.

On Monday, the US ISM Services PMI will be of note for the major as the UK markets will remain closed in observance of May Day. Tuesday lacks any top-tier UK or US macro news, so all eyes turn toward Wednesday’s Fed interest rate decision.

The Fed is widely expected to hold rates following the May policy meeting. Still, Chairman Jerome Powell’s words on the potential impact of US tariffs on the economic and inflation outlook will hold the key and impact the USD performance across the board.

The BoE will steal the spotlight on ‘Super Thursday’as the Bank’s Monetary Policy Report (MPR) and Governor Andrew Bailey’s press conference will throw fresh hints on the timing of the next interest rate cut.

Later that day, the US will publish its weekly Jobless Claims data.

BoE Governor Bailey will make his second public appearance of the week on Friday, speaking at the Reykjavík Economic Conference in Iceland. Fed policymakers will also return to the rostrum after the ‘blackout period’.

That said, potential trade deals between the US and its major trading partners and developments on the tariff front will continue playing a pivotal role in the week ahead.

GBP/USD: Technical Outlook

Amid a Golden Cross and a bullish 14-day Relative Strength Index (RSI) on the daily chart, risks remain skewed to the upside for the GBP/USD pair in the short term.

The 50-day Simple Moving Average (SMA) crossed above the 200-day SMA on a daily closing basis on April 17, providing conviction to the bullish streak.

Meanwhile, the 14-day Relative Strength Index (RSI) has turned north while above the midline, currently near 59.

The pair must close the week above the critical 1.3350 psychological barrier to negate the corrective bias. The next powerful resistance aligns at the three-year high of 1.3445.

Acceptance above that level will likely kick off a fresh uptrend toward the February 2022 high of 1.3644.

Alternatively, if the correction gathers steam, the 1.3200 round level will be tested initially, below which the immediate support of the 21-day SMA at 1.3184 will be tested.

A sustained break below the 21-day SMA will target the 50-day SMA at 1.3007, followed by the 200-day SMA at 1.2845.

• The British Pound has fallen after initially trying to rally on Thursday against the US dollar in a remembrance of the overall range that we have been in.
• Quite frankly, this is a market that I think is probably just sitting still until we can figure out what to do with the next set of data.

Concerns of Recession, etc.

There are a lot of concerns about the United States heading into a recession. So, the non-farm payroll number on Friday will be a big deal. With that being the case, I think you’ve got a situation where it is probably only a matter of time before we come to some type of resolution. But the 1.32 level underneath is support at the moment with 1.3425 being resistance.

As we continue to go back and forth, I think it does suggest that we’re just waiting around. Keep in mind that interest rates in America have been climbing, so it’s not quite the interest rate play that it had been over multiple years. After all, for the longest time, you would just buy the British pound and short the US dollar. If we were to close on Friday below the 1.32 level, that could be the beginning of something important, just as a close above the 1.3450 level would be.

As things stand right now, it does look bullish, but it is worth noting that the area that we have been testing has been very important in the past. So, one would assume there’s a certain amount of market memory in this neighborhood and therefore it is going to take a lot of work to break out to the upside. Friday should be volatile, but Friday should also be very informational. So, pay attention to how we close for the session.

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