• EUR/GBP has found support above 0.8300, but remains capped below the 0.8365 area.
• Market expectations of a BoE rate hike on Thursday are keeping Pound downside attempts limited.
• The technical picture shows a fading bearish momentum with bulls still absent.

The Euro (EUR) remains practically flat against the British Pound (GBP) on Monday, with both currencies appreciating sharply against the US Dollar (USD) following the results of the US midterm elections, but with the GBP buoyed by market expectations that the Bank of England (BoE) will hike interest rates on Thursday. Against this background, the EUR/GBP pair remains stuck in a 40-pip range, just above 18-month lows, at 0.8330.

Eurozone preliminary data released on Wednesday revealed that consumer inflation accelerated to three-year highs in October, which adds pressure on the European Central Bank (ECB) to tighten its monetary policy further in the coming months. These figures have offset a downward revision of October’s HCOB Services Purchasing Managers Index (PMI) figures released earlier in the day.

In the UK, all eyes are on the BoE, which is widely expected to raise its Bank Rate by 25 basis points to 4% on Thursday. The final UK S&P Global Services PMI has also been revised lower, but the impact on the Pound was minimal.

Technical Analysis: EUR/GBP is looking for direction between 0.8320 and 0.8365

EUR/GBP trades at 0.8347 halfway through the last few days’ trading range, between 0.8320 and 0.8365. Momentum indicators in the 4-hour chart are neutral-to-bullish, with the Relative Strength Index (14) nearing the 50 midline and the Moving Average Convergence Divergence (MACD) marginally positive. The Doji candles in the daily chart, however, highlight a hesitant market.

Bulls need to breach the October 30 and November 2 highs, near 0.8365 to confirm a deeper correction towards the October 26 high, in the 0.8400 area. On the downside, the area between Tuesday’s low at 0.8330 and the late March 2025 lows at 0.8315 is likely to test bearish attempts. Further down, the February 2025 low, near 0.8250, emerges as a plausible target.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

– Written by


David Woodsmith

STORY LINK Pound to Dollar Forecast: Democratic Sweep Lifts GBP/USD to 7-Week High

The Pound to Dollar exchange rate (GBP/USD) climbed to a seven-week high around 1.3495 as the US Dollar weakened following the Democrats’ sweep of both chambers of Congress in the midterm elections.

Pound Sterling also drew support from expectations of a Bank of England rate hike on Thursday, with markets now watching whether GBP/USD can break above 1.3500

GBP/USD Forecasts: Hits Seven-Week High

The Pound to Dollar (GBP/USD) exchange rate strengthened sharply on Wednesday as the US Dollar came under pressure following the Democratic sweep in the US midterm elections.

GBP/USD climbed to around 1.3495, its strongest level since mid-September, as investors assessed the implications of Democrats taking control of both the House and Senate.

Sterling also remained supported ahead of Thursday’s Bank of England policy decision, with markets still expecting a 25 basis-point rate increase to 4.00%.

Scotiabank sees scope for further Dollar losses; “We continue to highlight fundamental downside risk to the USD and DXY, given that it continues to trade well above levels implied by our FV estimate.”

UoB had also highlighted scope for GBP/USD to extend its advance towards 1.3480, a level that has now been surpassed.

Democratic Sweep Weighs on Dollar

The Dollar weakened after Democrats won control of both chambers of Congress, creating divided government for the final two years of President Donald Trump’s term.

Markets had largely anticipated Democratic gains in the House, but the clean sweep was a more significant outcome than many investors had priced.

The result increases the potential for political gridlock over government funding, debt-ceiling negotiations and elements of the administration’s economic agenda.

It has also increased expectations of tighter congressional scrutiny of the US technology sector.

ING had commented ahead of the results; “Our baseline assumption is that markets fully price in a Republican loss of the House, but only partially a Democratic clean sweep. A blue sweep can put some pressure on the dollar.”

The bank added that tougher regulation could weigh on AI stocks, which has become increasingly important for the Dollar given the close relationship between US technology-sector sentiment and capital inflows.

The Dollar index subsequently slipped as investors reduced exposure to the US currency.

Strong US Jobs Data Limits Dollar Downside

The Dollar’s losses have nevertheless been contained by relatively encouraging US labour-market data.

JOLTS job openings increased to 7.523mn in September from 7.19mn previously, comfortably above consensus forecasts around 7.15mn.

Hiring also increased, while layoffs fell to their lowest level since March 2025.

The stronger figures suggest that the US labour market remains resilient despite relatively weak payroll growth.

Markets continue to price a significant probability that the Federal Reserve will raise interest rates again in December.

This should limit the extent of any sustained Dollar sell-off unless incoming inflation and employment data weaken materially.

For Sterling, the immediate focus now turns to Thursday’s Bank of England meeting.

The BoE is widely expected to increase Bank Rate from 3.75% to 4.00%, its first hike since 2023.

The main market focus will be on the vote split and the Bank’s guidance over how much further tightening may be required in 2027.

A relatively hawkish message could push GBP/USD above 1.3500 and bring the mid-1.35s into focus.

Conversely, if policymakers push back strongly against expectations for three or four further rate hikes next year, Sterling could give back part of its recent gains.

For GBP/USD, 1.3500 is now the immediate resistance area, with 1.3400 providing initial support.

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TAGS: Pound Dollar Forecasts

Euro: Factory Growth Holds Up as Costs Rise

October’s eurozone manufacturing PMI, a survey of purchasing managers, eased to 52.7 from 52.9, Reuters reported. A reading above 50 signals improving manufacturing conditions. Operating costs rose at their fastest pace in five months. Export orders strengthened, but overall new-order growth slowed, leaving factories facing higher costs as demand growth lost some pace.

The European Central Bank held rates unchanged on October 29 and kept its approach dependent on incoming data. It said higher energy prices posed upside risks to inflation and downside risks to growth. That leaves the euro facing an awkward balance: persistent inflation could support more tightening, but higher borrowing costs and weaker demand would weigh on activity. The ECB has not committed to a fixed rate path.

The pair ended its latest bullish corrective rally with another close below the additional resistance level at 178.10, forcing it to form negative waves and currently stabilize near 177.15.

Repeated stability below this additional resistance will increase the chances of further bearish waves, targeting 176.40, followed by 175.75. However, breaching this barrier and holding above it will confirm the pair’s commitment to the bullish corrective path, opening the way for further gains toward 178.65 and 179.25.

The expected trading range for today is between 176.40 and 178.10

Trend forecast: Bearish

Pound-to-Euro Forecast: Goldman Revision Points to €1.2050

Goldman Sachs has become more positive on Pound Sterling against the Euro near term, while warning that rich valuations could limit lasting gains.

The Pound to Euro exchange rate slipped 0.15% to €1.1979 on Monday, remaining close to the level implied by Goldman Sachs’ newly revised three-month forecast.

The bank has cut its EUR/GBP projection for that horizon to 0.83 from 0.86, a change favouring Pound Sterling.

Inverting the new forecast gives approximately £1 to €1.2050, according to Exchange Rates UK calculations.

That represents only around 0.6% further upside from Monday’s rate, despite the substantial revision to Goldman’s previous view.

Goldman still expects Pound Sterling to give back ground over a longer horizon, making this a slower projected reversal of its strength rather than a forecast of uninterrupted gains.

Euro weakness has done much of the work

Goldman’s analysis challenges the idea that October’s move was primarily a vote of confidence in the UK economy.

Its trade-weighted measure of Pound Sterling, excluding the Euro, was close to flat over the month.

Goldman writes: “Meanwhile, the ubiquitous sell-off in the Euro versus both energy importers and exporters alike suggests to us that this month’s move is more a function of shifting fiscal, activity and policy risks, than purely of shifts in energy terms of trade.”

The UK Budget largely avoided an immediate adverse market surprise, although Goldman says important spending questions have been deferred until next year.

France still faces the task of securing a credible fiscal plan: its finance ministry responded to Fitch’s negative outlook by calling for a responsible budget to be adopted before year-end.

Goldman writes:

“A rotation in fiscal premia from the UK to Europe also helps shift the distribution of near-term EUR/GBP risks to the downside, but we remain more cautious on Sterling’s longer-term outlook.”

The revision is more supportive near term than Crédit Agricole’s recent forecast for Pound Sterling to retrace some of its gains.

Expensive Pound Sterling still faces a limit

The approaching BoE decision on Thursday 5 November can support the currency without resolving Goldman’s reservations about its valuation.

“Even with hikes in November and February, BoE hike pricing continues to look stretched relative to G10 peers, and valuation remains a clear challenge for Sterling.”

“This is true both structurally (where our GSDEER model suggests Sterling has the highest valuation in G10) and cyclically (where EUR/GBP’s sell-off has been at odds with rate differentials for much of this year).”

Its 12-month EUR/GBP forecast is higher than the new three-month projection, allowing the Euro to recover some of its losses.

Those valuation estimates do not identify when the currency will reverse.

UBS favours the income advantage

UBS also prefers Pound Sterling to the Euro, but its case includes the interest income available from holding the currency.

Its retained end-2026 EUR/GBP forecast is 0.84, which would put GBP/EUR slightly below Monday’s level, with a modest Euro recovery envisaged during 2027.

UBS’s Constantin Bolz and Maelle Quillevere write: “The BoE’s expected hiking cycle, resilient UK economic data, and short sterling positioning should help offset a moderate EUR recovery. Sterling’s higher yield also makes the case for the GBP more compelling from a total-return perspective than the spot outlook alone suggests.”

The positioning evidence cited by UBS concerns Pound Sterling against the US Dollar, not a measured short position in GBP/EUR.

More interest income can improve an investor’s overall return without producing a higher Pound-to-Euro conversion rate.

At the end of last week, UBS wrote: “Markets are already almost fully pricing an ECB rate hike in December, leaving relatively limited scope for additional EUR support from near-term rate expectations.”

It sees a potential route towards improved Euro sentiment: “In 2027, we see room for the euro to regain some lost ground from oversold levels, particularly if France succeeds in passing a budget by year-end and fiscal concerns start to ease.”

It also identifies a nearer risk to its currency preference: “A more dovish-than-expected BoE would also challenge our preference for sterling.”

What This Means for GBP/EUR

With the exchange rate valued at almost €1.20, Pound Sterling is already close to the level implied by Goldman’s revised three-month forecast. The upgrade offers support for holding near recent levels, but leaves much less prospective upside than the size of the forecast change might suggest.

A BoE message that validates further tightening, alongside continued French fiscal uncertainty, would favour Pound Sterling. Cautious guidance or progress towards a credible French budget could instead allow the Euro to recover.

– Written by


Ben Hughes

STORY LINK Pound Sterling Forecast: UK-EU Trade Breakthrough Supports GBP/USD

The Pound to US Dollar (GBP/USD) exchange rate edged higher on Tuesday as progress towards a new UK-EU trade agreement offered support to Sterling.

At the time of writing, GBP/USD was trading at approximately $1.3416, up modestly from Tuesday’s opening levels.

The Pound (GBP) strengthened against several major currencies after London and Brussels reached a provisional agreement aimed at reducing post-Brexit trade barriers for food and agricultural products.

The proposed sanitary and phytosanitary (SPS) agreement would remove many of the inspections, certificates and administrative requirements currently facing businesses trading agricultural goods between the UK and European Union.

These checks have increased costs and complicated cross-border trade since Brexit, particularly for food producers and exporters dealing with perishable goods.

Reducing these barriers could therefore provide a meaningful benefit for British businesses, with estimates suggesting the agreement has the potential to boost the UK economy by as much as £5.1bn annually.

The prospect of lower trading costs and improved access to European markets offered encouragement to Sterling investors, particularly as the UK continues to face challenges from elevated borrowing costs and subdued economic growth.

However, the agreement remains provisional and will require approval from EU member states before it can take effect.

Nevertheless, the progress represents a significant development in Prime Minister Andy Burnham’s efforts to rebuild economic relations with Brussels.

For currency markets, closer cooperation with the EU could improve the UK’s longer-term growth prospects, although the eventual economic benefits will depend on the final terms and implementation of the agreement.

The US Dollar (USD), meanwhile, struggled to establish a clear direction as Americans headed to the polls for the country’s midterm elections.

Opinion polls suggested that Democrats could make substantial gains, raising the possibility of a change in control of one or both chambers of Congress.

The prospect of a shift in the balance of power has created uncertainty over President Donald Trump’s ability to advance his economic and fiscal agenda during the remainder of his term.

A divided Congress could make it more difficult for the administration to secure approval for new tax and spending measures, potentially influencing expectations for US government borrowing and economic growth.

However, investors remained cautious about drawing conclusions before the results became clearer.

With several possible outcomes and their economic implications still uncertain, the Dollar traded without a strong directional bias during Tuesday’s session.

Near-Term GBP/USD Forecast: US Election Results and BoE Decision in Focus

The Pound to US Dollar exchange rate could experience increased volatility on Wednesday as investors assess the emerging results of the US midterm elections.

A strong Democratic performance could prompt markets to reassess expectations for President Trump’s fiscal agenda, particularly if the results point towards greater legislative opposition.

Such an outcome could weigh on the Dollar if investors anticipate reduced scope for additional fiscal stimulus or greater political uncertainty.

However, the market reaction will also depend on how the results influence expectations for government borrowing, Treasury yields and the wider US economy.

For Sterling, attention will increasingly turn towards Thursday’s Bank of England (BoE) interest rate announcement.

Policymakers are widely expected to raise borrowing costs at their November meeting, following recent UK employment and inflation figures that strengthened expectations of further monetary tightening.

With an increase already largely reflected in market pricing, the accompanying vote split and guidance on future policy could prove more important for the Pound than the decision itself.

A hawkish message suggesting that additional rate increases remain likely could provide Sterling with support, potentially allowing GBP/USD to challenge the recent six-week high around $1.3420.

Conversely, a more cautious assessment from the Monetary Policy Committee (MPC), particularly if policymakers push back against expectations for three further rate increases over the coming year, could put pressure on the Pound.

GBP/USD may therefore struggle to establish a sustained move above $1.34 until investors have greater clarity on both the US political outlook and the Bank of England’s next policy steps.

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TAGS: Pound Dollar Forecasts

The EURUSD pair declined in its latest intraday trading, amid continued negative signals from the relative strength indicators, while the stubborn resistance level at 1.1190 remains intact. The decline has also pushed the pair below its EMA50 support, potentially exposing it to further downside pressure and signaling additional losses in the near term.

The pair remains under the influence of the corrective bullish bias, moving further away from the main support level at 174.95, to begin recording the first previously anticipated corrective target at 177.25.

The price still has an opportunity to record further gains, supported by the positive momentum from stochastic, attempting to retest the additional resistance barrier at 178.10. On the other hand, activating a new bearish move will require the price to break the mentioned support level and hold beneath it, strengthening the chances of targeting new bearish levels starting at 174.00 and 173.50.

The expected trading range for today is between 176.20 and 178.10

Trend forecast: Bullish

Pound: BoE Expected to Deliver First Hike Since 2023

Final PMI data, a monthly survey of purchasing managers, showed British manufacturers started the fourth quarter with their strongest output growth in more than two years, Reuters reported. Economists polled by Reuters expect the Bank of England to raise rates to 4% from 3.75% on Thursday, its first hike since August 2023.

Companies also expect prices to keep rising. The BoE’s Decision Maker Panel, a monthly survey of company finance chiefs, showed year-ahead inflation expectations rising to 3.3% from 3.1%. Rabobank expects a 7-2 vote among the nine policymakers and a follow-up hike in February. I expect the UK-US rate gap to keep GBP/USD supported this week, since UK rates are set to rise while US yields fall.

USD/JPY moved higher despite the pullback in Treasury yields. The yield of 2-year Treasuries declined towards the 4.58% level, while the yield of 10-year Treasuries settled below 4.90%.

USD/JPY needs to settle above the resistance at 158.00 – 158.50 to have a chance to gain upside momentum in the near term. In this case, USD/JPY will head towards the next resistance, which is located in the 160.00 – 160.50 range. It remains to be seen whether BoJ is ready to provide support to the yen if USD/JPY tests the 160.00 level, but traders are worried about this scenario.