July 7, 2025 – Written by David Woodsmith

STORY LINK GBP/USD Forecast: Pound Sterling Falls vs Dollar as Tariff Jitters Hit Markets

The Pound US Dollar exchange rate (GBP/USD) weakened on Monday as Donald Trump’s looming tariff deadline soured market sentiment.

At the time of writing, GBP/USD was trading at $1.3595, down around 0.3% on the day.

The US Dollar (USD) made gains on Monday, buoyed by a wave of risk aversion that swept through global markets in anticipation of Donald Trump’s looming tariff deadline.

The US President had previously pushed back the implementation of his so-called ‘reciprocal’ tariffs to allow room for negotiations, but the grace period ends on Wednesday. With many nations still without agreements in place, investors grew increasingly jittery.

Adding to the tension, Trump warned that countries choosing to align with the BRICS bloc of emerging economies could face even steeper trade penalties.

Posting on Truth Social, Trump declared:

‘Any Country aligning themselves with the Anti-American policies of BRICS, will be charged an ADDITIONAL 10% Tariff. There will be no exceptions to this policy. Thank you for your attention to this matter!’

The renewed threat of tariffs dampened risk appetite across markets, driving investors towards the relative safety of the US Dollar and lending it fresh momentum to start the week.

The Pound (GBP) came under pressure on Monday, as the prevailing risk-off sentiment weighed on the increasingly risk-sensitive currency. Still, Sterling managed to hold up better than some counterparts, partly shielded by the UK’s existing trade agreement with the US, which helped soften concerns over looming American tariffs.

Even so, domestic issues continued to cloud the outlook for the Pound. With no major UK data releases to drive momentum, investors remained focused on political developments at home. Last week, the UK government was forced into an embarrassing climbdown on planned welfare cuts, after signs of a brewing rebellion among Labour backbenchers.

This U-turn not only cast doubt on the administration’s authority to push through tough fiscal measures but also fuelled speculation that tax rises could be on the cards in the autumn to plug the gap, unsettling markets already wary of the UK’s fragile public finances. As a result, the Pound lacked support on Monday.

Looking ahead, a sparse data calendar for both the Pound and the Dollar in the coming days means broader market sentiment is set to take the driver’s seat for the GBP/USD pair.

Much of the focus will be on developments surrounding Trump’s tariff agenda. If nerves persist over the prospect of sweeping ‘reciprocal’ tariffs – or the threat of extra levies on BRICS-aligned nations – investors could continue to favour the safe-haven US Dollar, pushing Sterling lower.

On the other hand, any signs of progress on trade talks, unexpected compromises or a decision to delay implementation could lift global risk appetite, offering the Pound some relief against the ‘Greenback’.

Either way, with markets on edge over trade policy, the stage looks set for heightened volatility, leaving GBP/USD vulnerable to sharp swings.

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TAGS: Pound Dollar Forecasts

EUR/USD Technical Analysis

The euro has pulled back just a bit during the trading session here on Monday, as it looks like we may have just gotten a little bit ahead of ourselves. And I think ultimately, we could see a pullback to the 1.16 level, an area that previously had been significant resistance. So, I think it does make a certain amount of sense that, really, at that point in time, I think any type of bounce opens up the possibility of getting long again. If we break down below there, then it’s likely that we will go much lower.

USD/JPY Technical Analysis

The US dollar has risen against the Japanese yen as well, as we are well above the 145 yen level, and it looks much like a market that does want to go higher over the longer term, perhaps reaching the 148 yen level. That being said, we are very much in the middle of consolidation right now, and therefore, I’m not really aggressive with it at this point. I think short-term pullbacks do offer a little bit of hope here for those who would want to take advantage of value. I think 142 yen is your floor, 148 yen is your ceiling.

• GBP/USD slumps below 1.3600 in the European session on Monday.
• The technical picture highlights a buildup of bearish momentum.
• The pair could struggle to rebound in case markets remain risk-averse.

After ending the previous week in negative territory, GBP/USD stays under bearish pressure early Monday and trades deep in negative territory below 1.3600. A key support area for the pair seems to have formed at 1.3560-1.3550.

GBP/USD turned south in the second half of the previous week, pressured by the political jitters in the UK and a renewed US Dollar (USD) strength on the upbeat employment data. Early Monday, the negative shift seen in risk mood allows the USD to stay resilient against its peers and makes it difficult for the pair to find a foothold.

Meanwhile, Bank of England policymaker Alan Taylor argued late Friday that it would be better to cut the policy rate now and hold for longer, rather than holding for too long and cutting the rates in a hurry later.

The economic calendar will not offer any high-tier data releases on Monday that could influence GBP/USD’s action. Hence, market participants are likely to remain focused on risk perception.

At the time of press, the UK’s FTSE 100 Index was trading virtually unchanged on the day, while US stock index futures were losing between 0.3% and 0.7%. In case safe-haven flows continue to dominate the action in financial markets because of the uncertainty surrounding the US trade relations ahead of the July 9 deadline, GBP/USD could continue to stretch lower.

GBP/USD Technical Analysis

GBP/USD dropped below the 100-period Simple Moving Average (SMA) on the 4-hour chart and the Relative Strength Index (RSI) indicator fell to 40, highlighting a bearish tilt in the short-term outlook.

On the downside, 1.3560-1.3550 (200-period SMA, lower limit of the ascending channel, Fibonacci 38.2% retracement level of the latest uptrend) aligns as key support area before 1.3500 (static level, round level) and 1.3470 (Fibonacci 50% retracement).

Looking north, resistance levels could be seen at 1.3600 (100-period SMA), 1.3630 (Fibonacci 23.6% retracement) and 1.3700 (mid-point of the ascending channel, 50-period SMA).

July 7, 2025 – Written by Frank Davies

STORY LINK Euro to Dollar Forecast: “EURUSD to End 2025 Closer to 1.10”

Goldman Sachs has a 12-month Euro to Dollar exchange rate (EUR/USD) forecast of 1.25 as net dollar losses continue at a slightly slower pace.

BNY Mellon remains cautious over the Euro and noted; “we lean toward EURUSD ending the year closer to 1.10, rather than making a sustained attempt at 1.20.”

After surging to 45-month highs around 1.1830 early in the week, EUR/USD consolidated around 1.1780.

Trade developments and fiscal chatter will be big influences during the week with high volatility even if the Federal Reserve story is in temporary abeyance. If Trump is back on the warpath against Fed hair Powell. Volatility is liable to spike even higher.

The headline US employment report was stronger than expected with an increase in non-farm payrolls of 147,000 for June compared with consensus forecasts of around 110,000.

The headline figure, however, was inflated by a big increase of over 70,000 in government jobs while ADP data reported a 33,000 decline in private jobs for June.

Overall, markets ruled out the potential for a July Fed rate cut with the chances of a September cut dipping to around 80%.

The issue of Fed independence will remain a key market theme amid President Trump’s threats to sack Powell or nominate an early candidate to take over in May 2026.

Rabobank commented; “Crucially, if any replacement for Powell was judged to be at risk of medium-term inflation stability by cutting rates too fast and too soon, the USD could be faced with a steeper decline.”

As far as fiscal policy is concerned, the Senate passed the budget bill as Vice-President Vance provided the tie breaker after a 50-50 vote.

The House also approved the Bill with a small majority and the bill has been signed into law by Trump.

The Congressional Budget Office (CBO) has estimated that the Bill will increase government debt by $3.3trn over 10 years. The Treasury market will be watched closely in the short term.

Trade developments will also be a key element in the week ahead. Ahead of the July 9th deadline, Trump is planning to announce take it or leave it tariff levels for the rest of the world.

ING noted; “Needless to say this could be a noisy period for FX markets as the White House again makes heavy threats in order to get trade deals over the line.”

The bank added; “As a reminder, the top G10 FX performers during the worst of April’s volatility were the Swiss franc, the euro and the yen – in that order. The dollar was broadly offered. And yesterday’s FX price action suggests investors and corporates were more than happy to sell dollars into rallies.”

Euro-Zone developments will also have a key influence.

CIBC notes ECB support for a greater Euro role as a reserve currency.

It added; “While some ECB members may soon become nervous regarding the pace of EUR appreciation, we would still view the currency as being on the cheap side of relative fair value, which we would estimate to be around €1.30.”

Goldman is confident that there will be further inflows, but added; “absent a growing list of reasons to reallocate away from the US, the pace of the inflows to Europe could taper off slightly as they did in 2017, which may imply a slightly slower and choppier path higher for EUR/USD from here.”

BNY Mellon considers the Euro-Zone deflation threat could return; “We foresee a more difficult road ahead in H2 2025, with business cycle indicators struggling to generate any momentum. This will increase the likelihood of renewed ECB easing or at least a more defensive stance. Meanwhile, structural reforms will take time, and hard data will likely fall short of what is currently priced in.”

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TAGS: Euro Dollar Forecasts

• EUR/USD trades in negative territory below 1.1750 on Monday.
• The risk-averse market atmosphere makes it difficult for the pair to gain traction.
• Markets await clarity on the EU-US trade relations.

EUR/USD stays under bearish pressure at the beginning of the week and trades below 1.1750. The pair’s technical outlook points to a bearish tilt in the near term as investors await news on the EU-US trade relations.

The US Dollar (USD) benefits from the risk-averse market environment on Monday and weighs on EUR/USD. Reflecting the souring mood, US stock index futures were last seen losing between 0.2% and 0.6%.

Late Friday, a White House official said that trade negotiations with the EU were continuing and added that there was optimism an agreement could be reached soon. In the meantime, US President Donald Trump noted over the weekend that they will notify the countries, with which they fail to reach a deal, of tariff rates by July 9. Commerce Secretary Howard Lutnick explained that tariff rates will be set on by July 9 but they will take effect on August 1.

The data from Germany showed early Monday that Industrial Production grew by 1.2% on a monthly basis in May. This reading followed the 1.6% decrease recorded in April and came in better than the market expectation for a no change but failed to help the Euro gather strength.

In the absence of high-impact data releases, the risk perception could continue to drive EUR/USD’s action in the near term. In case Wall Street’s main indexes open on a bearish note and continue to push lower, the USD could hold its ground and continue to drag the pair lower. On the other hand, the pair could stage a rebound if markets turn optimistic about an EU-US trade deal ahead of the July 9 deadline.

EUR/USD Technical Analysis

EUR/USD dropped below the 20-period and the 50-period Simple Moving Averages (SMA) on the 4-hour chart and the Relative Strength Index declined to 40, highlighting a buildup of bearish momentum.

On the downside, 1.1730 (static level) aligns as an interim support level before 1.1670 (lower limit of the ascending regression channel) and 1.1640 (100-period SMA). Looking north, resistance levels could be seen at 1.1770 (mid-point of the ascending channel, 20-period SMA), 1.1800 (static level, round level) and 1.1830 (static level).

The GBPJPY pair forced to form some bearish correctional rebounds, in order to gather the positive momentum to reinforce the chances for resuming the bullish attack, depending on the repeated stability above the support of the bullish channel at 196.20.

By the above image, we notice the attempt of the price to surpass 61.8%Fibonacci correction level at 197.50, to reinforce the chances for achieving several gains that might extend in the current period to 198.20, then repeat the pressure on the resistance at 198.80, to find an exit for resuming the rise in the upcoming period.

The expected trading range for today is between 196.80 and 198.80

Trend forecast: Bullish

The GBPJPY pair forced to form some bearish correctional rebounds, in order to gather the positive momentum to reinforce the chances for resuming the bullish attack, depending on the repeated stability above the support of the bullish channel at 196.20.

By the above image, we notice the attempt of the price to surpass 61.8%Fibonacci correction level at 197.50, to reinforce the chances for achieving several gains that might extend in the current period to 198.20, then repeat the pressure on the resistance at 198.80, to find an exit for resuming the rise in the upcoming period.

The expected trading range for today is between 196.80 and 198.80

Trend forecast: Bullish

EUR/USD prediction: Analysts’ outlook

Analysts remained divided in 2025 on the near-term EUR forecast, with monetary policy divergence and growth differentials driving sentiment.

Wells Fargo expected the Fed to begin easing in September with 75 bps of total cuts by year-end, citing a likely slowdown in growth and labour market cooling. By contrast, the ECB has already cut 200 bps since late 2024 and may be nearing the end of its cycle. ‘We see just one final 25 bps ECB rate cut, to 1.75%, in September,’ the bank noted.

Trading Economics saw signs of stabilisation in the eurozone, with inflation expectations falling and 2025 GDP forecast at 0.9%. The June PMI rose to 40.5 – the slowest decline in nearly three years – and business confidence hit a three-year high.

In the US, the Fed held rates steady at 4.25%-4.50% for a fourth meeting in June. Growth is now seen at 1.4% for 2025, with PCE inflation forecast at 3.0%. Trading Economics noted a cautious stance as policymakers assess the economic impact of President Trump’s policies on tariffs, immigration, and taxation.

Meanwhile, S&P Global’s US Manufacturing PMI held at 52 in June, signalling modest growth, though some analysts warned the recent strength may be short-lived. “Such a boost is likely to unwind in the coming months,” said S&P Global’s Chris Williamson.

Capital.com analyst input: Daniela Hathorn

On 1 July, Capital.com analyst Daniela Hathorn said the euro is expected to stay ‘moderately bullish’ in the second half of 2025, supported by signs of eurozone resilience. With ECB rates at 2% as of June, she noted that the bank can now take ‘a more conservative approach going forward’. This front-loaded stance, she said, had been ‘widely celebrated by euro traders’, giving the currency an extra boost.

At the same time, she highlighted that the US dollar had come under ‘significant downside pressure’ due to President Trump’s trade policies, helping lift EUR/USD above 1.17 – its highest level since September 2021.

‘A recovery in European industrial output or improved risk sentiment from continued easing geopolitical tensions could bolster the pair above the 1.18 level,’ Hathorn added. But she warned of lingering risks tied to US trade talks and ‘fragile peace dynamics in the Middle East and Eastern Europe’.

Is the US dollar losing its crown?

Forecasts remain subject to change and should not be used as a substitute for your own market research. Always consider your risk tolerance and trading strategy before trading or investing.

You’ll also notice that over the last couple of months, we’ve gradually seen higher levels. So, it’ll be interesting to see if we can build up enough pressure to finally break out as the interest rate differential continues to favor the United States.

AUD/USD Technical Analysis

The Australian dollar has dropped a bit as we continue to sit just above that crucial 0.6550 level, which is an area that I’ve been talking about for what seems like a lifetime now. This is a market that just simply doesn’t have anywhere to be, but it is slowly grinding higher. And that’s probably what you need to pay the most attention to.

If we do break down below the 0.6550 level, then we could see this market drop down to the 50-day EMA. But really, I think at that point, you’d just be looking at a value play. We’ve been in this very tight channel that’s been ascending since the middle of April. At this point, there’s nothing on this chart that tells me things are changing.

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

• GBP/USD moves sideways at around 1.3650 on Friday.
• The cautious market stance makes it difficult for the pair to gain traction.
• Trading volumes are likely to thin out, with US financial markets remaining closed on July 4.

Following the sharp decline seen on Wednesday, GBP/USD found support on Thursday and closed the day marginally higher. The pair, however, struggles to extend its rebound and trades in a narrow band at around 1.3650 in the European session on Friday.

Easing geopolitical concerns in the UK helped Pound Sterling hold its ground early Thursday after British Prime Minister Keir Starmer reassured that finance minister Rachel Reeves will remain in her position.

Later in the day, the US Dollar (USD) gathered strength on upbeat macroeconomic data releases and capped GBP/USD’s upside. The US Bureau of Labor Statistics reported that Nonfarm Payrolls (NFP) rose by 147,000 in June. This reading came in better than the market expectation of 110,000. Furthermore, the Unemployment Rate edged lower to 4.1% from 4.2% in May. Finally, the Institute for Supply Management’s (ISM) Services Purchasing Managers’ Index (PMI) rose to 50.8 in June from 49.9, showing that the business activity in the service sector expanded following May’s contraction.

Early Friday, the UK’s FTSE 100 Index loses about 0.4% on the day, reflecting a cautious market mood. In a report published on Friday, S&P Global said that the UK’s inability to make modest cuts to welfare spending underscores the government’s very limited budgetary room for maneuver.

Financial markets in the US will remain closed in observance of the July 5 holiday on Friday. Hence, GBP/USD could continue to move sideways heading into the weekend.

GBP/USD Technical Analysis

GBP/USD remains below the 20-period and the 50-period Simple Moving Averages (SMA) on the 4-hour chart and the Relative Strength Index (RSI) indicator stays below 50, pointing to a lack of buyer interest.

On the downside, 1.3630 (static level) aligns as an intermediate support level before 1.3600 (100-period SMA) and 1.3555 (200-period SMA). Looking north, resistance levels could be seen at 1.3680 (20-period SMA, 50-period SMA, mid-point of the ascending channel),1.3710 (static level) and 1.3770 (static level).