Created on February 21, 2025

• The British pound has broken significantly below the 190 yen level and then broke significantly lower than that.
• That being said, the market has turned around to show signs of somewhat resilient behavior.
• If we can turn around and break above the 190 yen level, I think that could be a fairly decent sign of bullish pressure.

If we can break above there, then the market could go looking for the 50-day EMA, possibly even the 200-day EMA after that. If we break down below the bottom of the candlestick, then the market could drop to the 187 yen level and then possibly the 185 Yen level. These are a few of the important levels I will be watching if we do drop from here.

Support Sitting Below

The 185 Yen level is an area that has been important multiple times as support. So, I think you have to pay close attention to it if we do drop from there. But really at this point in time, I think you’ve got a situation where we are starting to see a little bit of value come into the picture. And despite the fact that the Bank of Japan is suggesting that they are going to lift rates later this year. The reality is that the interest rate differential will continue to be huge between these two currencies and you do get paid to hold British pounds against the yen.

The yen has been a bit of a juggernaut as of late, but I don’t know if this is a longer term trade. I think given enough in the meantime, though, we’re trying to get our footing, and it is going to be quite noisy. This is fairly common for this pair, and therefore we should be cautious about our position sizing in this market going forward.

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February 20, 2025 – Written by Ben Hughes

STORY LINK GBP/USD Forecast: Pound Sterling Buoyed on Possible China Trade Deal

The Pound Sterling trended higher versus the US Dollar on Thursday morning as investors weighed fresh comments from US President Donald Trump regarding a potential trade agreement with China.

At the time of writing, the Pound to Dollar exchange rate (GBP/USD) was trading at approximately $1.2614, up around 0.2% from Thursday’s opening levels.

The US Dollar (USD) weakened on Thursday after President Trump suggested the possibility of reaching a new trade deal with China.

Speaking late Wednesday, Trump indicated that a new trade agreement with Beijing is ‘possible’ and hinted at a potential visit from Chinese President Xi Jinping to discuss a deal.

This follows speculation in US media that Trump is aiming to secure a more expansive trade pact with China, fueling optimism that tensions between the two economic superpowers could ease.

However, limiting losses for the US Dollar were Trump’s continued threats to impose 25% tariffs on key imports, including vehicles, semiconductor chips, and pharmaceuticals.

Further cushioning USD’s downside was the release of minutes from the Federal Reserve’s latest policy meeting, in which officials reaffirmed their cautious stance on rate cuts.

Despite making gains against the US Dollar, the Pound (GBP) struggled to build momentum against other major currencies.

Concerns over the UK’s economic health kept Sterling’s upside potential in check, particularly after a new report highlighted a significant drop in consumer confidence.

Households appear increasingly wary of rising living costs, with spending expectations falling in response to fears of further price hikes following the government’s latest Budget.

Looking ahead to the end of the week, the Pound-to-Dollar exchange rate could be influenced by upcoming UK economic data.

Friday’s session kicks off with the UK’s retail sales figures, which are expected to show a recovery in consumer spending last month.

This will be followed by the release of the UK’s PMI data, with a stronger-than-expected acceleration in private sector growth likely to support Sterling.

Meanwhile, the latest US S&P PMIs could influence USD movement later in the session. If the February figures mirror the weak performance seen in January, the US Dollar may struggle to regain ground.

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Created on February 20, 2025

• According to recent trading activity, the GBP/USD exchange rate has stabilized above the 1.26 level, with gains reaching the 1.2637 resistance level, the highest point for the currency pair in two months.
• The pound has remained stable upwards after Britain announced an unexpected rise in inflation from 2.5% in December to 3.0% year-on-year in January, exceeding previous consensus estimates for a rise to 2.8%.
• Consequently, this means that buyers of the US dollar are seeing the best available exchange rate since December 19th.

Factors Contributing to the Pound Sterling’s Gains

According to Forex market trading and through trusted trading company platforms, the pound’s advance comes amid rising inflation in the British services sector to 5.0% in January from 4.4%, raising concerns that high inflation is widespread and will require a more restrictive stance from the Bank of England. The bank is tasked with targeting inflation at 2.0%, and all signs now point to increased price pressures. Furthermore, the typical response would be to tighten policy by keeping prices unchanged or even raising them.

However, the bank expects inflation to rise to 3.7% this year, but believes the rise will be temporary and has indicated that it will continue to cut interest rates.

Nevertheless, the February inflation release appears hotter than the bank expected, suggesting it will have no choice but to halt the easing cycle later in the year. Inflationary pressures are expected to rise in the spring as the government imposes significant new taxes on businesses, which are likely to lead to higher prices. Overall, money markets will price in fewer interest rate cuts, which should support UK bond yields and automatically boost the value of the pound sterling.

GBP/USD futures in forex

The GBP/USD exchange rate rose to a high of 1.2639 in mid-week trading, which represents the strongest level for dollar buyers since December 19, 2024. Although hotter-than-expected inflation data in Britain offers some upside, the bulk of the advance is due to dollar weakness. Commenting on currency market trading, experts at Capital Economics believe: “The US dollar remains in retreat as the ‘Trump trade’ with the dollar recedes.” They added, “Between news about President Trump’s tariff plans, his moves towards apparent rapprochement with Russia, and some weaker US economic data towards the end of the week, the dollar has fallen to its lowest level in two months.”

However, Capital Economics sees limits to US dollar weakness, which could contain GBP/USD’s rally.

He maintains his expectations that the dollar will end the year higher, “because we still believe that US tariffs will end up rising significantly, while the US economy and stock market will resume outperformance.”

Trading Tips:

The British pound is a risk currency that benefits from positive investor sentiment and strong financial markets, so monitor the factors influencing this to anticipate the most appropriate trading opportunities

Technical Analysis for the GBP/USD pair today:

According to recent trading, the GBP/USD pair has now retreated to trade slightly below the 100-hour moving average line. However, the pair made a late recovery to avoid falling into oversold levels for the 14-hour RSI. In the near term, bulls will look to move the currency pair higher at around 1.2635 or higher at the 1.2690 resistance. In contrast, bears will seek to capitalize on renewed selling at around 1.2540 or lower at the 1.2475 support.

In the long term, based on the performance on the daily chart, the GBP/USD pair is trading inside an ascending channel formation. Also, the 14-day RSI supports a long-term bullish bias as it approaches overbought levels. Therefore, bulls will seek to ride the current wave of gains towards the resistance of 1.2825 or higher to the psychological resistance of 1.3000. On the other hand, and on the same time frame, bears will seek to benefit from the renewed selling operations to move the currency pair towards the support levels of 1.2360 and then to the support of 1.2100 respectively.

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• The USD/JPY outlook suggests a scramble for safety in the yen.

• The US president announced a likely 25% tariff on automobiles.

• The FOMC meeting minutes revealed inflation worries due to Trump’s trade policies.

The USD/JPY outlook suggests a scramble for safety in the yen as market participants worry about Trump’s tariffs. At the same time, stalled talks between Russia and Ukraine have lowered the likelihood of a near-term end to the war. 

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The yen soared to new highs on Thursday as traders scrambled for safe assets amid economic and geopolitical uncertainty. The global economy is under threat as Trump marches on with new tariffs. On Tuesday, the US president announced a likely 25% tariff on automobiles that will affect most major economies, especially the Eurozone. These new tariffs follow duties on steel, aluminum, and Chinese goods. At the same time, markets expect a 25% tariff on Mexico and Canada in March. 

The tariffs might ignite a global trade war that would negatively impact the global economy. Consequently, risk appetite will continue dropping, supporting safer currencies like the yen and the US dollar. 

Elsewhere, the FOMC meeting minutes revealed that policymakers were worried Trump’s tariffs would lead to a spike in inflation. Therefore, there is a high chance the Fed will keep interest rates elevated. 

At the same time, tensions between Russia and Ukraine have increased since Trump’s recent involvement. Ukraine is now accusing Russia and the US of secret deals that have caused a pause in planned talks. Continued geopolitical tensions will increase demand for the traditionally safe yen. 

USD/JPY key events today

USD/JPY technical outlook: Price in freefall towards 149.50

On the technical side, the USD/JPY price has collapsed further and broken below the 151.02 support level. This move has pushed the price far below the 30-SMA, indicating a strong bearish lead. At the same time, the RSI has dipped into the oversold region, indicating solid bearish momentum. 

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Bears took charge when the price met its resistance trendline. The reversal was sharp, pushing the price below the 30-SMA. Moreover, bears confirmed a continuation of the downtrend when the price broke below 151.01 to make a lower low. 

Given the strong bearish bias, USD/JPY might soon reach the 149.50 level. However, since the RSI is in the oversold region, the price might soon pause before continuing lower.

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• EUR/USD enters a consolidation phase following a three-day decline.
• Sellers could remain interested in case EUR/USD fails to reclaim 1.0440.
• The US economic calendar will feature weekly Initial Jobless Claims data.

EUR/USD moves sideways below 1.0450 after closing the previous three days in negative territory. In the absence of high-tier data releases, the risk mood could influence the pair’s action in the second half of the day.

The minutes of the Federal Reserve’s (Fed) January policy meeting showed late Wednesday that some policymakers cited potential changes in trade and immigration policy as having potential to hinder the disinflation process. Although investors largely ignored this publication, the cautious market stance helped the US Dollar (USD) hold its ground and didn’t allow EUR/USD to stage a rebound.

Later in the day, the US Department of Labor will publish the weekly Initial Jobless Claims data. Markets expect the number of first-time applications for unemployment benefits to rise to 215,000 in the week ending February 15 from 213,000 in the previous week. A reading at or below 200,000 could support the USD with the immediate reaction and cause EUR/USD to stretch lower. On the other hand, a print above 230,000 could have the opposite impact on the pair’s action.

Meanwhile, US stock index futures were last seen losing between 0.2% and 0.3%. A bearish opening in Wall Street, followed by a sharp decline in main equity indexes, could allow the USD to benefit from safe-haven flows and open the door for an extended slide in EUR/USD.

EUR/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart stays below 50, highlighting a lack of buyer interest. 

On the downside, 1.0390-1.0400 (100-period Simple Moving Average (SMA), 50-day SMA, Fibonacci 50% retracement of the latest downtrend) aligns as the first support area before 1.0370 (200-period SMA) and 1.0350 (Fibonacci 38.2% retracement).

In case EUR/USD climbs above 1.0440 (Fibonacci 61.8% retracement) and confirms this level as support, technical sellers could be discouraged. Above this resistance, 1.0500-1.0510 (round level, Fibonacci 78.6% retracement) and 1.0550 (static level) could be seen as next hurdles.

Copper price continued to provide negative pressures on 4.5300$ support line, affected by stochastic continuous negativity, to confirm postponing the bullish attempts, while we recommend to wait to break the current support to start targeting the correctional stations near 4.4600$ and 4.3900$.

On the other hand, failing to break will force the price to provide mixed sideways trades due to the continuous contradiction between the major indicators, in addition to 4.6800$ level that forms solid barrier against the attempts to regain the bullish bias.

The expected trading range for today is between 4.4600$ and 4.6200$

Trend forecast: Bearish

Copper price continued to provide negative pressures on 4.5300$ support line, affected by stochastic continuous negativity, to confirm postponing the bullish attempts, while we recommend to wait to break the current support to start targeting the correctional stations near 4.4600$ and 4.3900$.

On the other hand, failing to break will force the price to provide mixed sideways trades due to the continuous contradiction between the major indicators, in addition to 4.6800$ level that forms solid barrier against the attempts to regain the bullish bias.

The expected trading range for today is between 4.4600$ and 4.6200$

Trend forecast: Bearish

Delta Airlines’ stock price (DAL) fell in the intraday levels while trying to gather positive momentum to rise anew, as it leaned on the support of the 50-day SMA, amid the dominance of the main upward trend while the stock trades alongside the secondary short-term trend line, as a positive divergence forms in the RSI after reaching oversold levels compared to the stock’s movements, sending out positive signals. 

Therefore we expect the stock to return higher and target the pivotal resistance of $69.98, provided the support of $60.40 holds on.

Trend forecast for today: Likely Bullish

Delta Airlines’ stock price (DAL) fell in the intraday levels while trying to gather positive momentum to rise anew, as it leaned on the support of the 50-day SMA, amid the dominance of the main upward trend while the stock trades alongside the secondary short-term trend line, as a positive divergence forms in the RSI after reaching oversold levels compared to the stock’s movements, sending out positive signals. 

Therefore we expect the stock to return higher and target the pivotal resistance of $69.98, provided the support of $60.40 holds on.

Trend forecast for today: Likely Bullish