Created on March 06, 2025

• The weakness of the US dollar immediately after the official announcement of US tariffs on global economies, coupled with investors’ relatively increased risk appetite, helped bulls push the GBP/USD pair towards the resistance level of 1.2900.
• This is the pair’s highest in four months, and it is stabilizing around its gains at the start of today’s Thursday trading.

Interest Rate Bets and Britain’s Avoidance of US Tariffs Helped Bulls

According to Forex market trading and reliable trading companies’ platforms, the British Pound benefited significantly from expectations that interest rates in Britain will remain higher for longer, with traders reducing their bets on interest rate cuts by the Bank of England to 52 basis points for 2025. Bank of England Deputy Governor Ramsden warned that persistent wage pressures could keep inflation high but suggested that future interest rate cuts could accelerate if needed.

Additionally, the Pound is seen as less exposed to US tariffs, especially after US President Trump suggested a potential trade deal with Britain that could avoid new tariffs. At the same time, Germany announced a significant increase in defence and infrastructure spending, while Britain has already outlined its plans to increase defence spending and cover it with cuts in development budgets.

Trading Tips:

As we expected before, the improvement in investor and market sentiment will support further gains for the British pound, and now you should be careful not to renew the selling operations to take profits.

Trump’s Tariffs Weaken the US Dollar

According to Forex market trading, the US dollar’s decline after the confirmation of tariffs on Canada and Mexico perplexed traders and analysts alike. In general, the dollar’s weakness reflects expectations that tariffs pose a significant obstacle to US economic growth and at the same time raise inflation. In short, it’s stagflation. Commenting on recent trading, Morgan Stanley analysts say that this breakout is very important because it opens the door to broader US dollar weakness. After recent gains, the GBP/USD pair rose to recover the 50% Fibonacci retracement of the major decline that occurred from October 2024 to January 2025.

On another note, the slowdown in US economic data has become clear, prompting financial markets to bet on further US interest rate cuts by the Federal Reserve. Money markets show that investors are pricing in 75 basis points of cuts by the December meeting. That would mean three 25 basis point cuts, higher than the single cut expected in early February. This is weighing on US bond yields, which in turn is weighing on the US dollar.

Rise in British Treasury Bond Yields

According to recent trading, the yield on the 10-year British treasury bond rose 11 basis points to 4.613%, following a rise in European bond yields after Germany announced a historic fiscal shift to boost spending on defence and infrastructure. The move signals increased borrowing across Europe, weighing on UK revenues as the government also plans to increase defence spending, funded by cuts in other areas.

At the same time, expectations of a Bank of England rate cut have dimmed, with markets now pricing in just 52 basis points of cuts for 2025. BoE Deputy Governor Ramsden warned that persistent wage pressures could keep inflation high, but also suggested that future rate cuts could accelerate if economic conditions worsen.

Technical Analysis for the GBP/USD pair today:

According to the performance on the daily chart, bulls’ control over the GBP/USD pair is getting stronger and a move towards the psychological resistance of 1.3000 will be the strongest confirmation of the upward shift. At the same time, technical indicators will move towards strong overbought levels led by the movement of the RSI and MACD indicators. In contrast, and over the same time frame, the support level of 1.2630 will remain a threat to the current upward shift. Finally, we expect GBP/USD to remain on its upward trajectory until the reaction to the US jobs numbers which may affect market expectations for future US central bank policy.

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• EUR/USD trades at fresh multi-month highs near 1.0800 in the European morning on Thursday.
• The ECB is widely anticipated to lower key rates after March policy meeting.
• The pair remains technically overbought in the near term.

EUR/USD preserved its bullish momentum and registered impressive gains for the third consecutive day on Wednesday. The pair continues to inch higher in the European morning on Thursday and trades at its highest level since early November above 1.0800. 

The US Dollar (USD) remained under heavy selling pressure midweek despite the upbeat ISM Services Purchasing Managers Index (PMI) report for February. News of US President Donald Trump granting the US automative industry a one-month exemption from 25% tariffs imposed on Canada and Mexico allowed the risk mood to improve and forced the USD to continue to weaken.

Later in the day, the European Central Bank (ECB) will announce monetary policy decisions and publish the revised macroeconomic projections. Markets widely expect the ECB to lower key rates by 25 basis points (bps).

A downward revision to inflation and growth expectations could cause investors to price in a continuation of policy easing and open the door for the Euro to correct lower. Market participants will also pay close attention to comments from ECB President Christine Lagarde. In case Lagarde adopts a cautious tone on additional rate cuts, citing the uncertainty surrounding the EU-US trade relations, the Euro could hold its ground.

The US economic calendar will feature the weekly Initial Jobless Claims data. Investors, however, could ignore this data ahead of Friday’s Nonfarm Payrolls (NFP) report.

EUR/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart climbed above 80, reflecting extremely overbought conditions for EUR/USD in the near term. On a bullish note, the pair made a daily close above the 200-day Simple Moving Average (SMA), currently located at 1.0720, for the first time in four months.

On the downside, 1.0760 (static level) aligns as interim support before 1.0720 (200-day SMA) and 1.0700 (static level, round level). Looking north, first resistance could be spotted at 1.0900 (static level, round level) ahead of 1.0940 (static level from November).

Copper price confirmed its surrender to the previously suggested positivity by settling within the bullish channel frequently and surpassing 4.6800$ barrier now, to notice the beginning of recording the positive targets by touching 4.7800$ now.

The continuous positive momentum provided by the major indicators will increase the efficiency of the bullish track, to expect attacking 4.8100$ recorded high soon, while surpassing it will start targeting new positive stations by rallying towards 4.9100$ and face the bullish channel’s resistance line.

The expected trading range for today is between 4.6800$ and 4.9100$

Trend forecast: Bullish

Copper price confirmed its surrender to the previously suggested positivity by settling within the bullish channel frequently and surpassing 4.6800$ barrier now, to notice the beginning of recording the positive targets by touching 4.7800$ now.

The continuous positive momentum provided by the major indicators will increase the efficiency of the bullish track, to expect attacking 4.8100$ recorded high soon, while surpassing it will start targeting new positive stations by rallying towards 4.9100$ and face the bullish channel’s resistance line.

The expected trading range for today is between 4.6800$ and 4.9100$

Trend forecast: Bullish

• GBP/USD climbed above 1.2900 for the first time in nearly four months.
• The technical outlook points to overbought conditions in the near term.
• The pair’s correction attempts could remain short-lived ahead of Friday’s US labor market data.

GBP/USD extended its rally into a third consecutive day on Wednesday and gained nearly 0.8%. The pair is already up about 2.5% this week as it trades at its highest level since November, above 1.2900. 

The positive shift seen in risk mood forced the US Dollar (USD) to stay under pressure midweek, allowing GBP/USD to gather further bullish momentum. News of US President Donald Trump granting the US automative industry a one-month exemption from 25% tariffs imposed on Canada and Mexico, and planning to do the same for some agricultural products, helped the risk mood improve on Wednesday.

In the meantime, Pound Sterling also benefitted from hawkish Bank of England (BoE) commentary. While testifying before the UK Treasury Select Committee on Wednesday, BoE policymaker Megan Greene said it is appropriate to maintain a cautious and gradual approach to removing monetary restrictiveness. “The evidence points against more rapid cuts in the bank rate for me,” Greene added.

In the second half of 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 decline to 235,000 from 242,000. A bigger-than-expected drop in this data could support the USD with the immediate reaction. Investors, however, could refrain from taking large positions ahead of Friday’s highly-anticipated February employment report.

GBP/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the daily chart holds near 80 and GBP/USD trades above the upper limit of the ascending regression channel, highlighting overbought conditions.

On the downside, 1.2870 (upper limit of the ascending channel) aligns as first support before 1.2800 (200-day Simple Moving Average) and 1.2750 (mid-point of the ascending channel). Looking north, first resistance could be seen at 1.3000 (static level, round level) before 1.3040 (static level from November).

Palo Alto Networks’ stock price (PANW) rose in the intraday levels, amid the dominance of the main upward trend in the medium term, as a positive divergence formed in the RSI after reaching oversold levels compared to the stock’s movements, sending out positive signals, but the price is hurt by negative pressure from the 50-day SMA, which could curb upcoming gains.

Therefore we expect the price to rise and target the pivotal resistance of $208.40, provided the support of $178.80 holds on.

Trend forecast for today: Likely Bullish

March 5, 2025 – Written by Frank Davies

STORY LINK Pound to Euro Forecast: GBP Slips vs EUR amid Eurozone Economic Optimism

Pound Sterling (EUR) weakened against the Euro (EUR) on Wednesday as the common currency gained strength from positive economic news.

At the time of writing, the Pound Euro (GBP/EUR) exchange rate was trading at around €1.2002, down roughly 0.4%from Wednesday’s opening levels.

On Wednesday, the Euro (EUR) rose against most of its counterparts, supported by news that the anticipated members of Germany’s next coalition have reached a deal on a debt brake.

The Euro also benefited from a weakening US Dollar, due to their inverse relationship.

Furthermore, despite a mixed set of economic data from the Eurozone, including a worse-than-expected services PMI and a better-than-expected PPI release, the single currency maintained its strength.

On Wednesday, the Pound (GBP) remained resilient against most of its major peers after the release of the UK’s latest services PMI.

The finalised index for February remained in expansion territory,(a reading above 50) with a reading of 51, up from 50.8, though slightly below the expected 51.1.

Despite this, Sterling held its strength and even made slight gains against some of its counterparts.

Looking ahead to Thursday, the primary factor influencing the Pound Euro exchange rate will likely be the European Central Bank’s (ECB) upcoming interest rate decision.

The ECB is widely anticipated to cut interest rates by 25 basis points. However, if this rate cut is accompanied by dovish forward guidance, indicating a more cautious stance on future monetary policy, the Euro could
weaken as the trading session progresses.

On the other hand, the Pound may lack a clear direction on Thursday, as there is no scheduled UK economic data to provide guidance. This could lead to Sterling trading in a more rangebound manner, influenced more
by market sentiment and external factors.

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March 5, 2025 – Written by Tim Boyer

STORY LINK Best Pound to Dollar Rate of Three Months ($1.28) as US Growth Fears Mount

Pound Sterling (GBP) rallied to a fresh three-month best exchange rate against the US Dollar (USD) on Wednesday as worries over US economic performance continued to weigh on USD sentiment.

At the time of writing, the Pound US Dollar (GBP/USD) exchange rate was trading at around $1.2849, marking a 0.4% increase from the day’s opening levels.

The US Dollar (USD) remained under pressure on Wednesday as mounting fears of a potential recession dented demand for the ‘Greenback’.

Concerns have intensified following the latest wave of tariffs imposed by US President Donald Trump on key trading partners, including Mexico, Canada, and China.

During a speech to Congress, Trump admitted that the US economy could face ‘a little disturbance’ in the short term, but markets fear the consequences could be more severe.

Investor unease was reflected in the bond market, where an inversion of the US Treasury yield curve—a classic signal of an impending recession—further fueled speculation that the US economy may struggle in the months ahead.

This has prompted a shift in expectations for the Federal Reserve’s monetary policy, with traders now betting on multiple rate cuts in 2025, increasing the likelihood of an initial cut as early as May.

The Pound (GBP) capitalized on USD weakness, with additional support coming from improving sentiment across European markets.

Investor confidence was lifted after German coalition talks resulted in an agreement to ease fiscal constraints, paving the way for increased government spending on infrastructure and defence.

The move is expected to inject much-needed stimulus into the Eurozone economy, with potential spillover benefits for the UK, further bolstering Sterling’s appeal.

Looking ahead, the upcoming US jobs report could play a pivotal role in shaping the Pound US Dollar exchange rate in the latter half of the week.

If non-farm payrolls data disappoints again, it may add to concerns over slowing US economic momentum and strengthen the case for an earlier Fed rate cut, accelerating USD losses.

Meanwhile, with little in the way of high-impact UK data, broader market sentiment will likely dictate GBP movement. Should risk appetite remain elevated, the Pound could continue its advance against a struggling US Dollar.

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February 28, 2025 – Written by Tim Boyer

STORY LINK Pound to Euro Forecast: Two-Month Best Now, 1.2350 in Six Months

The Euro has been hampered by a renewed threat on tariffs on EU goods from President Trump with the Pound to Euro (GBP/EUR) exchange rate strengthening to 2-month highs just above the 1.2100 level, but has not made a convincing break higher at this stage.

Danske Bank expects that GBP/EUR will strengthen to 1.2350 on a 6-month view.

Markets are, however, also having to factor in the Ukraine situation. In essence, US trade policies are likely to be a threat to the single currency, but a Ukraine ceasefire would potentially support the Euro.

ING noted that Ukraine’s hopes have helped underpin the Euro but added, “the threat of tariffs looms large and could easily insert a risk premium back into those currencies in the firing line.”

US President Trump has threatened to impose 25% tariffs on US imports from the EU, and an announcement will be coming soon.

ING commented; “Our baseline view is that tariffs will go into place in April.”

Tobin Marcus, head of US policy and politics at Wolfe Research, commented, “The 25% threat that he threw out today is in line with the high end of the range that he previously indicated.”

He added; “It’s a number that’s concerning – certainly should be concerning – for the trans-Atlantic trade relationship, but not totally out of the blue.”

Danske Bank analyst Mohamad Al-Saraf considers that the pound could be a relative outperformer because the trade deficit between the U.S. and Britain is relatively small.

According to Al-Saraf; “If we actually see tariffs being implemented, we expect the pound to outperform in the G10 space. Looking at the price action in the past few months, the pound is relatively immune to all this tariff talk.”

ING considers the potential implications; “The EU is better prepared to tackle Trump 2.0, but it still faces a complex challenge in countering potential US tariffs.”

It added; “While the bloc has several options at its disposal – including retaliatory tariffs on key US exports and the implementation of a digital services tax – the effectiveness of these measures will depend on its ability to act swiftly and cohesively, with a reliance on widespread member state support.”

There will be potentially important implications for monetary policy.

MUFG commented; “The looming threat of tariff hikes on the EU in the coming months continues to pose downside risks to growth in the euro-zone and may encourage the ECB to keep lowering rate at every meeting at least until rates move closer to President Lagarde’s estimated range for the neutral rate between 1.75% and 2.25%.”

Further aggressive rate cuts would tend to undermine the Euro.

MUFG has, however, noted some hawkish comments from ECB officials and added; “The comments suggest to us that it is far from a done deal that the ECB will cut rates both in March and April as currently priced in. It poses one potential upside risk for euro in the near-term although we still expect the policy rate to fall to 2.00% this year.”

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TAGS: Currency Predictions Pound Euro Forecasts