April 17, 2025 – Written by David Woodsmith

STORY LINK GBP/USD Forecast: Pound Looks to be Overbought Against Dollar

After hitting 6-month highs close to 1.3300, the Pound to Dollar exchange rate dipped to test 1.3200 before rebounding to 1.3240.

US equities posted sharp losses on Wednesday before a tentative rebound in futures on Thursday.

Scotiabank noted that the Pound is looking overbought but added; “We look to near-term resistance around 1.33, and beyond that, the September high around 1.34. Near-term support is expected between 1.3220 and 1.32.”

Although the dollar has managed to crawl away from 3-year lows, underlying confidence remains weak with the currency undermined by a fresh slide in US equities with the S&P 500 index sliding 2.2% on Wednesday. The currency index (DXY) was held below 100.

After Wednesday’s European close, Fed Chair Powell stated that the Administration had been more aggressive than expected in imposing tariffs.

He warned that the economy was liable to be weaker and inflation higher which would complicate the task in setting policy.

According to Powell; “We may find ourselves in the challenging scenario in which our dual-mandate goals are in tension. If that were to occur, we would consider how far the economy is from each goal, and the potentially different time horizons over which those respective gaps would be anticipated to close.”

His rhetoric was more hawkish than comments from Governor Waller earlier in the week.

Powell again considered that the central bank needed to be patient and there was no case for making any quick judgement on interest rates.

ING commented; “In normal market conditions, Powell’s hawkishness would have triggered a positive USD response. But the greenback is still responding to the narrative of relative US assets underperformance and growth concerns, which are arguably being compounded by a hawkish Fed.”

ING added; “Despite plenty of indications that the dollar is oversold and undervalued, we don’t see a catalyst for a respite today. Should US equities underperform again, DXY should extend its drop below 99.0.

Citi played down the risk of a big structural move away from the dollar; “We do not think this is a proper de-dollarisation and see no real risk to the USD reserve currency status.”

It did, however, add; “However, the world is overweight U.S. assets. Ultimately this ‘sell America’ flow could severely weigh on the USD this year.”

Confidence surrounding trade talks will also be a key element.

On Wednesday, there were some reports that China was open to talks with the US, but there were important conditions and overnight the foreign ministry stated that China will pay no attention if the United States continues to play the “tariff numbers game.”

Charu Chanana, chief investment strategist at Saxo, said markets are detecting signs of hope in US-Japan trade talks.

She added; “When the bar is low, even talks about talks can lift markets as investors rotate from fear to hope.”

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Created on April 17, 2025

• Currency traders failed to achieve an upward rebound for the USD/JPY currency pair; its slight gains did not exceed the 143.27 level, and it quickly returned to its stronger downward path, despite strong US retail sales figures.
• USD/JPY trading is stabilizing around the 141.66 level at the time of writing the analysis, paving the way for a more violent downward move.

Why does the USD/JPY continue to move strongly downward?

According to Forex market trading, the Japanese Yen’s gains against other major currencies increased, with the widespread weakness of the US dollar continuing. Growing concerns about the economic repercussions of a potential new round of US tariffs contributed to the decline of the US dollar. In the latest development in trade policy, US President Donald Trump ordered an investigation into the possibility of imposing tariffs on all essential US metal imports, much of which comes from China. This move has increased investor anxiety, adding pressure on the dollar. Meanwhile, attention is shifting to upcoming trade talks between Japan and the United States, as Tokyo is striving for the complete abolition of Trump’s tariffs.

On the Japanese front, traders absorbed data showing an eight-month high in Japanese manufacturing sector confidence for April. However, the outlook remains cautious amid ongoing concerns about US trade policy.

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The Future of the Bank of Japan’s Policy Amid Trump’s Tariffs

In this regard, Bank of Japan Governor Kazuo Ueda stated in an interview with the Sankei newspaper that the BOJ may consider taking policy action if US tariffs harm the Japanese economy. He added, “Taking policy action may become necessary,” noting that the risks posed by US President Trump’s trade actions have approached the “bad scenario” anticipated by the central bank.

The governor acknowledged that recent developments are already affecting business and household confidence. While the Board still plans to raise interest rates at an “appropriate pace,” Ueda stressed the importance of assessing the economic impact of US tariffs without prejudging them. He added that domestic food price inflation is likely to decline, real wages are expected to rise mid-year, and that upside and downside risks remain regarding inflation expectations.

The Bank of Japan will hold a monetary policy meeting from April 30 to May 1, where it will also release updated economic forecasts.

USD/JPY Technical analysis and Expectations Today:

Dear reader, as clearly shown on the daily chart, the overall trend for the USD/JPY currency pair remains bearish. Also, the return to the vicinity of the current support at 141.60 signals a deeper downward move. The psychological support at 140.00 will be an easy target for the bears, and until it moves towards or away from it. Furthermore, technical indicators have moved towards strong oversold zones, as is the case with signals from the MACD, RSI, and other momentum indicators. Therefore, we recommend buying USD/JPY from the vicinity of the support levels 140.90, 140.00, and 139.20 respectively, with future targets at 143.20 and 145.00 respectively, and the stop-loss remains below the 138.00 support.

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• EUR/USD declines toward 1.1350 after posting gains on Wednesday.
• The ECB is widely anticipated to lower key rates by 25 basis points.
• The technical outlook points to a loss of bullish momentum in the near term.

EUR/USD gained traction and registered its highest daily close since February 2022 at 1.1400 on Wednesday. The pair corrects lower toward 1.1350 early Thursday as investors await the European Central Bank’s (ECB) monetary policy announcements.

The broad-based US Dollar (USD) weakness helped EUR/USD push higher on Wednesday as reports suggesting that the United States (US) President Donald Trump was planning to use ongoing tariff negotiations to pressure US trading partner to isolate China fed into fears over a deepening trade conflict.

The ECB is widely anticipated to lower key rates by 25 basis points (bps) following the April policy meeting. Since the ECB will not be releasing revised economic projections this time, investors will scrutinize the statement language and comments from President Christine Lagarde in the post-meeting press conference.

Earlier in the week, Bloomberg reported that the European Union (EU) was expecting a bulk of the tariffs imposed by the US to remain in place after little progress was made in talks on Monday. In case the ECB puts more emphasis on upside risks to inflation because of tariffs, rather than the growth outlook, markets could assess that as a hawkish tone. In this scenario, the Euro is likely to preserve its strength.

On the flip side, the Euro could struggle to find demand if the ECB, or President Lagarde, reaffirms confidence in the ongoing disinflation process and hints at a continuation of policy-easing.

EUR/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart retreated slightly below 60 and EUR/USD declined to test the 20-period Simple Moving Average, reflecting a loss of bullish momentum.

On the downside, 1.1280 (static level) aligns as first support level below 1.1230 (lower limit of the ascending channel) and 1.1200-1.1190 (static level, 50-period SMA). Looking north, resistances could be spotted at 1.1400 (static level, mid-point of the ascending channel), 1.1470 (static level) and 1.1500 (round level).

The GBPJPY pair activated the negative attack in yesterday’s trading, achieving the initial negative target by hitting 187.55 level, then it rebounded to settle above 38.2%Fibonacci correction level at 188.00, to gather the required negative momentum to confirm the continuation of the bearish trend in the upcoming trading.

In general, the bearish scenario would remain valid if the trading settled below the main resistance at 189.90, as confirming breaking 188.00 level makes us expect targeting new negative stations, and 186.50 level represents the next target for the negative trading, while the attempt of breaching the mentioned resistance will cancel the bearish suggestion in the near trading, as there is a chance for achieving some gains by the price rally towards 190.50 initially.

The expected trading range for today is between 186.50 and 189.20

Trend forecast: Bearish

The GBPJPY pair activated the negative attack in yesterday’s trading, achieving the initial negative target by hitting 187.55 level, then it rebounded to settle above 38.2%Fibonacci correction level at 188.00, to gather the required negative momentum to confirm the continuation of the bearish trend in the upcoming trading.

In general, the bearish scenario would remain valid if the trading settled below the main resistance at 189.90, as confirming breaking 188.00 level makes us expect targeting new negative stations, and 186.50 level represents the next target for the negative trading, while the attempt of breaching the mentioned resistance will cancel the bearish suggestion in the near trading, as there is a chance for achieving some gains by the price rally towards 190.50 initially.

The expected trading range for today is between 186.50 and 189.20

Trend forecast: Bearish

• The GBP/USD forecast shows a strong pound despite downbeat UK inflation figures.

• Consumer inflation in the UK increased by 2.6%, softer than the forecast of 2.7%.

• Market participants are waiting to see the state of consumer spending in the US.

The GBP/USD forecast shows strong bullish sentiment despite downbeat UK inflation figures. The pound rose to new highs on Wednesday as the dollar resumed its decline amid economic uncertainty. Meanwhile, market participants were looking forward to the US retail sales report for monetary policy clues. 

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Data on Wednesday revealed that consumer inflation in the UK increased by 2.6%, softer than the forecast of 2.7%. At the same time, it declined from the previous reading of 2.8%. The poor numbers led to an increase in Bank of England rate cut expectations. The likelihood of a rate cut in May rose from 80% to 86%. 

However, economists believe inflation will rebound in April. At the same time, BoE policymakers have cautioned that it is too early to judge the impact of Trump’s tariffs on inflation. As a result, the pound barely reacted to the news. 

Meanwhile, the dollar remained fragile as the outlook for the US economy dimmed. Trump’s tariff moves have discouraged investors from holding US assets. As a result, the greenback has lost some of its safe-haven appeal. Market participants are waiting to see the state of consumer spending in the US. The sales report will shape the outlook for Fed rate cuts.

GBP/USD key events today

• US core retail sales m/m
• US retail sales m/m
• Fed Chair Powell speaks

GBP/USD technical forecast: Higher high signals a strong uptrend

On the technical side, the GBP/USD price has made a higher high, strengthening the bullish bias. It has broken past the 1.3200 resistance level and is trading well above the 30-SMA. Meanwhile, the RSI has entered deeper into the overbought region, indicating solid bullish momentum. 

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GBP/USD has sustained a solid bullish rally without any significant pullbacks to the 30-SMA. However, bulls are getting exhausted. The price is making much smaller candles and is approaching the 1.272 Fib extension level. 

This level might be a strong hurdle that will trigger a pullback. Such an outcome would allow the price to retest the recently broken 1.3200 key level. However, the bullish bias will remain as long as the price stays above the SMA.

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USD/JPY Technical Analysis

The US dollar has fallen against the Japanese yen during the early hours again on Wednesday. But just like what we’ve seen over the last couple of days, there does seem to be a bit of a pushback in this area as 142 yen has become very important. After that, we have the 140 yen level, which I think will end up being a massive floor as well.

This doesn’t mean that I think the market’s going to suddenly take off to the upside. I just think that a bounce makes some sense. The 145 yen level will be difficult to get above, but if we were to break above that level, it would obviously be a very bullish sign. If we were to turn around and break down below the 140 yen level, then the market probably enters some type of freefall at that juncture.

AUD/USD Technical Analysis

The Australian dollar has rallied again during the trading session, but we continue to see a lot of resistance near the 0.64 level, as it is not only a major resistance barrier recently, but it also is where the 200-day EMA currently resides. With that being the case, I still think you’re looking for signs of exhaustion to short, or maybe we enter some type of range between 0.62 and 0.64 above, which is basically what we did for a couple of months there.

So, you could make a bullish argument here, but you need to clear the 200 day EMA decisively in order to make that argument. Furthermore, you would have to ignore the fact that the market is extraordinarily overbought, at least in the short term. So, this is why I’m not as excited about the Aussie dollar as I could be, just simply because I think gravity will continue to be an issue, at least for the short term.

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

April 16, 2025 – Written by James Fuller

STORY LINK Pound to Euro Forecast: “GBP to Underperform EUR as Dollar Weakens”

The Pound to Euro exchange rate has stalled a fresh round of demand for safe-haven assets.

GBPEUR was quoted at 1.16747 as risk conditions dominated the Pound Sterling on Wednesday, even though the latest UK inflation data did nudge the currency lower.

Market confidence dipped again following the warning from Nvidia that it faced $5.5bn in additional costs due to US Administration export controls to China on H20 chips.

Equities came under renewed pressure while gold surged to a fresh record high and the Euro secured fresh backing.

In this environment of US-China trade-war fears, the Pound to Euro dipped to lows around 1.1660.

There was, however, a brief recovery to near 1.1700 after China stated that it is open to talks if Trump shows respect and names a point person.

Inevitably, very choppy trading will continue in the short term.

ING commented; “The new EUR/GBP trading range could be something like 0.8500-0.8750 for the second quarter.” This would be a 1.1430 – 1.1765 GBP/EUR range.

According to MUFG; “We expect GBP to continue to underperform EUR as the dollar weakens but quicker than expected progress on a US-UK trade deal would help to quickly reduce that underperformance.”

Rabobank expects underlying tensions will continue; “even if tariff heat is dialled up and down, they are unlikely to disappear and other economic statecraft tools such as subsidies, export controls, and the politicised use of capital flows and FX policy are likely to join them.”

The Euro area recorded a current account surplus of EUR34bn for February which took the 12-month total to EUR411bn and 2.7% of GDP compared with EUR291bn last year (2.0% of GDP).

The strong balance of payments position will provide underlying Euro support, especially when risk appetite deteriorates.

The headline UK inflation rate declined to 2.6% for March from 2.8% previously and slightly below consensus forecasts of 2.7%.

The core rate edged lower to 3.4% from 3.5% and in line with market expectations.

The largest downward contributions came from recreation and culture, together with fuel, offset to some extent by higher clothing prices.

The CPI goods inflation rate declined to 0.6% from 0.8% while the services sector rate retreated to 4.7% from 5.0%.

MUFG commented; “While this is good news for the BoE and makes a 25bp rate cut a near certainty on 8th May, inflation is set to pick up in Q2 given the NICs tax increase on employers, the minimum wage increase and the rise in the utility energy price cap. All of these will see the headline CPI advance potentially to levels around 4.0%.”

The bank still sees a careful and gradual approach to monetary policy as justified.

As far as the ECB is concerned, there are strong expectations of a further 25 basis-point ECB rate cut at Thursday’s council meeting.

Guidance from the bank will be watched closely.

According to Danske Bank; “We expect Lagarde to highlight the downside risks to growth from the trade war while abstaining from giving any clear guidance on future rate decisions.

It added; “Going forward, we expect the ECB to deliver three 25bp cuts at the upcoming meetings, bringing the deposit rate to 1.50% by September 2025.”

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April 16, 2025 – Written by David Woodsmith

STORY LINK Pound to Dollar LIVE: 7th Consecutive Daily GBP Gain, “Momentum Remains Bullish”

The Pound to Dollar exchange rate rallied on Wednesday, striking a new multi-month high at 1.32679 amid mounting uncertainty over US trade policy.

According to FX strategists at Scotiabank, “GBPUSD’s gains have extended for a seventh consecutive session and momentum remains bullish with an RSI near the overbought threshold at 70.”

Looking ahead, with notable UK and US economic data in short supply, GBP/USD movement is likely to be driven by global sentiment in the second half of the week.

If investor confidence continues to deteriorate on the back of Trump’s erratic approach to trade policy, the US Dollar may remain under pressure.

However, any shift towards risk-off sentiment could allow the ‘Greenback’ to mount a recovery against the Pound.

Analysts at Scotiabank suggest 1.34 is in the crosshairs for near-term GBPUSD buyers.

“We look to near-term resistance around 1.33, and beyond that, the September high around 1.34. Near-term support is expected between 1.3220 and 1.32,” says Eric Theoret, FX Strategist at Scotiabank.

The US Dollar struggled to find its footing on Wednesday as investor concerns surrounding Washington’s trade strategy continued to mount.

Conflicting signals from President Trump over new tariffs on Chinese electronics has left markets rattled. Initial suggestions that products like smartphones would be exempt were quickly contradicted by Trump himself, who posted on social media that no such exemptions would be made.

He also hinted at launching a fresh investigation into the electronics supply chain — a move that further deepened uncertainty around US trade policy.

As doubts grow over the coherence of Trump’s economic agenda, investors are pulling back from the US Dollar, with fears of a recession now fuelling speculation of rate cuts from the Federal Reserve in the coming months.

The Pound (GBP) trended broadly lower on Wednesday, following the release of weaker-than-expected UK inflation figures.

Data from the Office for National Statistics (ONS) showed headline inflation fell from 2.8% to 2.6% in March, missing expectations for a more modest decline.

Sterling slid as the weaker-than-expected inflation print was seen as all but confirming the Bank of England (BoE) will cut interest rates in May, with GBP investors also pricing up to two more cuts in the second half of 2025.

This is despite expectations that UK inflation will quickly accelerate again in the coming months amid global trade tensions and rising energy prices.

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TAGS: Pound Dollar Forecasts

Created on April 16, 2025

• During trading on Thursday, we have seen the US dollar go back and forth against the Japanese yen as we try to sort out whether or not the ¥143 level will offer enough support to keep this market afloat.
• All things being equal, this is a market that is going to continue to be bearish from a longer-term perspective, looking back at the least 3 months or so.

As the tariff war continues, it’s interesting to see that the Japanese yen has been used as a safety currency over the US dollar, as the US bond market has been sold off quite viciously. That being said, I think there is a part of the story that people are not cognizant of. Most traders look at the US dollar falling and simply assume that it is some type of political decision. Reality is that bonds are being sold off in the United States in order to raise cash. After all, one of the most common places to store cash for large corporations and sovereign wealth funds would be the US Treasury market, so if you found yourself in a situation where you may need to hoard cash and become much more liquid, you would sell your bonds.

Technical Analysis

That being said, the end result is somewhat the same, but I think this is much more temporary than people realize. After all, the Federal Reserve looks likely to remain somewhat stubborn as far as interest rate cuts are concerned, and at the same time, you have the Japanese unlikely to do anything too aggressive. If global trade does in fact slow down, Japan is particularly vulnerable to this, and you may see the interest rate differential get interesting yet again. After all, you do get paid to hang on to this pair for the end of day swap.

At this point, I think if the market can close above the ¥145 level on a daily candlestick, then you may have more of a correction ahead. On the other hand, if we were to break down below the ¥142 level, then I think we would drop down to the ¥140 level.

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