Created on January 21, 2025

My previous GBP/USD signal last Tuesday produced a profitable short trade from the bearish reversal at the resistance level at $1.2245.

Today’s GBP/USD Signals

• Risk 0.75%.
• Trades may only be taken before 5pm London time today.

Long Trade Ideas

• Go long following a bullish price action reversal on the 1H1 time frame H1H1H1 timeframe immediately upon the next touch of $1.2245, $1.2227, or $1.2206.

• Place the stop loss 1 pip below the local swing low.
• Move the stop loss to break even once the trade is 25 pips in profit.
• Remove 50% of the position as profit when the price reaches 25 pips in profit and leave the remainder of the position to ride.

Short Trade Ideas

• Go short following a bearish price action reversal on the 1H1 time frame H1H1H1 timeframe immediately upon the next touch of $1.2315, $1.2348 or $1.2384.

• Place the stop loss 1 pip above the local swing high.
• Move the stop loss to break even once the trade is 25 pips in profit.
• Remove 50% of the position as profit when the price reaches 25 pips in profit and leave the remainder of the position to ride.

The best method to identify a classic “price action reversal” is for an hourly candle to close, such as a pin bar, a doji, an outside or even just an engulfing candle with a higher close. You can exploit these levels or zones by watching the price action that occurs at the given levels.

GBP/USD Analysis

I wrote in my previous GBP/USD forecast last week that the price was facing a very pivotal resistance zone centred on $1.2250. This was a good call, as this level held, and the resistance level just 5 pips below it held to the pip, producing a profitable short trade.

The technical picture has become more bullish one week later now, with the price consolidating and occasionally rising as it flattens out and leaves the area of the descending price channel represented by the linear regression analysis which is shown within the price chart below.

The US Dollar is in a long-term bullish trend, but this appears to have paused even though President Trump has now taken office and is mulling tariffs on some of the USA’s trading partners which would typically boost the greenback. The British Pound has also been weak lately on poor economic data from the UK and the new British government’s struggle for credibility with the markets over its economic projections. However, these issues appear to be taking a back seat.

Technically, we see a cluster of three support levels close to the current price, and this supportive area is likely to hold today and might drive the price higher. Nevertheless, a long trade here is certainly counter trend, so should be taken with caution and with conservative profit-taking.

I am prepared to take a long trade today from any bounce at any one of the three identified support levels.

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Japanese yen forecast improves amid narrowing yield differentials

The narrowing interest rate differentials between Japan and the rest of the world has been a key theme in the improving Japanese yen forecast in the last couple of weeks. The main USD/JPY pair dropped to fresh five-week lows on Tuesday, before bouncing back to trade in the green at the time of writing, while yen pairs such as the CAD/JPY, which have been falling even more sharply because of Trump’s plans to impose tariffs on Canada’s exports to the US, remained in the red. The yen has also shown relative strength against other commodity dollars as well. Pairs such as the AUD/JPY and NZD/JPY remained on the backfoot.

BoJ rate hike expectations underpin Japanese yen forecast

With a Bank of Japan (BoJ) rate hike this week almost fully priced in, could this recent USD/JPY dip offer a buy-the-dip opportunity, or will we see a more decisive bullish trend emerge for the yen?

As US-Japan yield spreads hit five-week lows, USD/JPY followed. However, with inflation risks heightened by potential large-scale tariffs, the recent yield compression may be nearing its limit, you would think. Thus, for the USD/JPY to drop more markedly, we will need to see a hawkish rate hike from the BoJ this week, or a significant deterioration in US data.

Rates markets are currently pricing in two full 25bp hikes by the end of 2025, with the first one arriving this week. Thus, if the BoJ opts for a smaller hike or no hike at all, that could trigger significant downside for the yen.

Tariff speculation keeping ComDolls undermined

Yesterday, there was initial optimism surrounding trade policy before Trump’s inauguration speech. But later this was overshadowed by news that the Trump Administration is likely to implement 25% tariffs on imports from Canada and Mexico starting in February. So, tariffs are still on the horizon, though not as soon as Trump had made it out to be case.

We initially saw a big relief rally in the likes of the Canadian dollar, Mexican peso, and the euro yesterday as Trump, when addressing tariffs, did not specify a timeline. In fact, he referred to himself as a “peacemaker and a unifier,” which suggests he may avoid actions that could cause significant tensions with other nations through sweeping tariffs.  However, this should not have been mistaken as a softening of his stance, because later, he said his government would impose 25% tariffs on imports from both sides of its borders.

Trump intends to overhaul the trade system in order to “tariff and tax foreign countries to enrich our citizens” through the creation of an “external revenue service.” His goals to reform international trade policies clearly prioritize American industries and aim to reduce trade deficits. By imposing tariffs on imports, revenue would be redirected toward domestic economic growth and infrastructure development.

CAD/JPY is the yen pair to watch

We have already seen repeated multi-year highs in the USD/CAD pair in recent months, and the Loonie hit a new high of just above 1.4500 overnight following Trump’s February 1 tariff threat, and despite its sizeable drop the prior day. Now with the USD/JPY moving into consolidation mode, the ongoing weakness in the CAD means the CAD/JPY pair could be poised for a breakdown.

The CAD/JPY has tried to break below its bullish trend line, but so far, the bears haven’t been quite successful. However, as the yield spread between Japan and the rest of the world narrows, while risks of tariffs for Canada’s exports grow, we could see the CAD/JPY break lower and potentially head down to the next support levels situated at 106.00 and then 105.00.

Japanese yen forecast: USD/JPY technical analysis

With the US dollar still remaining largely supported against other currencies, the USD/JPY may not be the best yen cross for those who are bullish on the Japanese currency. Still, given the narrowing yield spreads, I do think the upside is fairly limited for the USD/JPY from here.

USD/JPY’s dip overnight was brought around the minor horizontal support at 155.00. However, if rates resume lower and we go below this level, then you have a short-term uptrend that was established from September, around 144.00, to keep an eye on, followed by the 200-day moving average around 152.80 area.

For traders who are bullish the USD/JPY, they will now want to see rates breaking key short-term resistance around 156.00-156.75 area. A decisive break here would signal bullish sentiment, potentially opening the door for follow-up technical buying towards 160.00. But this is not my base case scenario.

Source for all charts used in this article: TradingView.com

— Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R

The AUDCAD price faced some positive pressures recently, to postpone the negative trades by forming temporary correctional bullish rebound and face 0.9030 barrier, noting that the frequent stability below 0.9085 resistance line and the MA55 crawl below it confirm the continuation of the negativity for the near-term and medium-term trades.

Also, stochastic reach to the overbought areas confirms getting rid of the positive pressures and provides the chance to gather the negative momentum again to ease the mission of renewing the negative attempts and target many negative stations that start at 0.8930 followed by reaching the next main target at 0.8800.

The expected trading range for today is between 0.8930 and 0.9045

Trend forecast: Bearish

Platinum price started to get the positive momentum after stochastic exit from the oversold areas, forming some bullish waves to approach 955.00$ obstacle, assuring the importance of surpassing this obstacle to open the way to record many gains by rallying towards 983.00$ level first, followed by reaching 1005.00$ on the near-term basis.

The risks of changing the bullish trend will appear in case the price formed sharp decline to settle below 920.00$ level, to return to fluctuate within the minor bearish channel that appears on the chart.

The expected trading range for today is between 930.00$ and 965.00$

Trend forecast: Bullish

Platinum price started to get the positive momentum after stochastic exit from the oversold areas, forming some bullish waves to approach 955.00$ obstacle, assuring the importance of surpassing this obstacle to open the way to record many gains by rallying towards 983.00$ level first, followed by reaching 1005.00$ on the near-term basis.

The risks of changing the bullish trend will appear in case the price formed sharp decline to settle below 920.00$ level, to return to fluctuate within the minor bearish channel that appears on the chart.

The expected trading range for today is between 930.00$ and 965.00$

Trend forecast: Bullish

The EURUSD price continued to rise yesterday to approach 1.0455$ level, waiting for more rise as a bullish correction for the decline measured from 1.1208$ to 1.0221$, noting that breaching 1.0455$ will push the price towards 1.0600$ as a next correctional target.

Therefore, the bullish trend will be suggested for today, taking into consideration that breaking 1.0325$ will stop the bullish wave and push the price to return to the main bearish track again.

The expected trading range for today is between 1.0320$ support and 1.0480$ resistance

Trend forecast: Bullish

FTSE rises to fresh record highs

• Attention is on Trump’s policy changes
• Rightmove data shows strong house price growth
• GBP/USD remains bellow 1.22
• FTSE rises to 8515

The Betsy has risen to a new record high, rising about Friday and closing at 8505, the previous record. The index was led higher by a broad range of sectors, including miners, banks, and utilities.

The FTSE 100 is supported after soft data last week, which reassured expectations that the Bank of England could cut interest rates more aggressively than the 1 cut the market had priced in.

GBP/US struggles below 1.22 at the multi-year low, which fits the multinationals that make up the large majority of the FTSE index.

Attention is on Donald Trump’s second inauguration and the measures he will implement immediately. While the UK isn’t necessarily in line for a direct hit from trade tariffs, it will likely be impacted indirectly should Trump adopt an aggressive stance. The US stock market is closed today.

The UK economic calendar is quiet, and figures from Rightmove have failed to buoy the house-building sector. Average asking prices for newly listed homes in the UK have seen the biggest start-of-the-year increase since 2020. According to Rightmove, the average price rose by 1.7% between December 8th and January 11th compared to the same period a year ago.

While the housing market gained some momentum on hopes that borrowing costs would continue to fall, the uncertainties surrounding BoE could limit gains going forward. The market is pricing two 25 basis point cuts this year, up from one at the start of last week. However, the BoE has guided towards four rate cuts.

FTSE forecast – technical analysis

The FTSE has broken out of range, rising above 8490 to fresh all-time highs. With blue skies above, buyers could consider the 8600 round number.

However, the RSI is very overbought, so buyers should be cautious some consolidation could be on the cards. Immediate support is at 8490 and 8400 below here. Should sellers take out 8325, the price returns to the familiar range within which it traded for much of the past 9-months.

USD/JPY holds steady in cautious trade ahead of Trump’s inauguration

• Attention is squarely on Trump’s inauguration
• BoJ could cut rates this week
• USD/JPY recovers from 155 support

USD/JPY is holding steady at the start of the new week as investors await cautiously ahead of chumps inauguration. President-elect Donald Trump is expected to make a flurry of policy announcements in the first hours of his second presidency. Meanwhile, the Bank of Japan is expected to hike interest rates at the end of the week.

Trump will take the oath at noon Eastern Time (19:00 GMT). He is expected to sign a slew of executive orders that will set the tone for his presidency. Monday is a US holiday, with stock markets closed for Martin Luther King Day. So, the forex market will see an immediate reaction to his inauguration pledges, while the stock markets will likely react when they open on Tuesday.

Where the US dollar goes from here greatly depends on how aggressively Trump implements trade tariffs and tax cuts. These measures are inflationary.  The USD has rallied on expectations of few rate cuts since Trump’s victory. Any sense of a more relaxed approach could pull the US dollar lower.

The USD fell last week after weaker-than-expected underlying US inflation saw the market ramp up Fed rate cut expectations. Dovish comments from Federal Reserve governor Christopher Waller also weighed on the USD.

The yen rallied last week on hints from the BoJ that a rate hike could be discussed at this week’s BoJ rate meeting.

Before the BoJ meeting on Friday, Japanese inflation data will be released.

USD/JPY forecast -technical analysis

USD/JPY eased back from a six-month high of 158.90 reached last week before finding support at 155.00, around the 50 SMA. The price holds steady around 156.20, while the RSI gives away few clues at its neutral level.

Buyers will need to rise above 156.20 and 157.00, the 78.6% Fib retracement level, to bring 158.90 into focus. A rise above here is needed to create a higher high and turn attention to 160.00.

Support is seen at 155.00, ahead of 154, the rising trendline dating back to 2022, and 153.30, the 61.8% fib retracement.

Image © Adobe Images

Pound Sterling has entered a technical downtrend against the Euro, with Tuesday’s labour market report posing new downside risks.

The Pound to Euro exchange rate (GBPEUR) is at 1.1850 after falling for three weeks in succession, and there is little in the technical charts or fundamental setup to advocate for a major recovery.

Weakness culminated in a break below the 200-day exponential moving average (EMA) last Tuesday (1.1890), and the exchange rate has so far failed to reclaim this technical level. A rule of Pound Sterling Live’s Week Ahead model is that a break below the 200 EMA signals an exchange rate has entered a multi-week downtrend.

In fact, it looks as though the 200 EMA will now act as a resistance level that will block any recovery attempts, suggesting any GBP/EUR strength in the coming days will be shallow.

The selloff has, nevertheless, slowed. The Relative Strength Index (RSI) reached oversold conditions last week (after hitting 30), which meant a period of recovery or consolidation was needed. It appears that consolidation has played out, allowing the RSI to unwind from oversold.

There also appears to be some graphical support forming at approximately 1.18450-1.1900, which goes back to periods of weakness in September and October of last year (see the turquoise line on the chart). This could offer some support in the run-up to Tuesday’s UK labour market report before ultimately giving way to a fresh leg lower.

Above: GBP/EUR at daily intervals, showing the break below the 200 EMA and the recent recovery from oversold in the RSI (lower panel).

Pound Sterling has been hit by a run of poor data over recent weeks that speaks of an economy that has run out of momentum owing to the significant taxes placed on businesses by the government. In addition, an inflation-busting increase to the minimum wage is due to come into effect, as is further red tape on employing people.

All this points to the labour market as a key cost driver and headwind for businesses operating in the UK, and this is why this week’s labour market report will be of particular interest. The outcome is likely to influence expectations for the amount of interest rate cuts the Bank of England will likely make this year.

The consensus looks for the unemployment rate to edge up to 4.4% from 4.3% in light of survey evidence of growing job losses and a slowdown in hiring intentions. In particular, the PMI surveys have been warning of a deterioration in the labour market for a couple of months now.

GBP/EUR investment bank consensus forecast for 2025. See the median, mean, highest and lowest point targets, giving a highly accurate forecasting resource. Request it Now.

“Employment indicators are pointing firmly to a decline in payrolled employment in the coming months,” says Sam Hill, Head of Market Insights at Lloyds Bank.

The Pound is likely to fall should unemployment rise faster than was expected and the opposite reaction is likely if the data proves stronger than expected.

“A payrolls rise would be a big surprise, suggesting business sentiment is overegging the jobs slowdown and likely pushing the market back to pricing fewer than two cuts,” says Robert Wood, an economist at Pantheon Macroeconomics.

Above: The economy has essentially flatlined following strong growth in the first half of 2024.

Of importance to traders will be the wage data that is released alongside the job figures. Here, The consensus expects wages to rise 5.5% in November, up from 5.2% in October. In isolation, the rule is that the pound will fall if wages undershoot expectations, but it will rise if the data beats.

The Bank of England is watching employment and wage dynamics, judging that high wages are inflationary and must be met with higher-for-longer interest rates.

However, rising unemployment will suggest to the Bank that wage pressures will fall notably in the coming months, which will allow them to cut interest rates further.

For the Pound, rising expectations for rate cuts will result in weakness and this is why we forecast further GBP downside in the coming days, judging that the process has further to run.

Money market pricing shows investors have raised bets for more rate cuts from the Bank of England this year, which has contributed to the weaker Pound. However, the market is still only expecting two rate cuts, with a third being a possibility.

Above: Markets see more rate cuts ahead than was the case just one week ago, and there is scope for this trend to continue.

Most economists we follow suggest four cuts is the most likely outcome. This means the market can continue to ‘price in’ rate cuts from here, resulting in further weakness in Pound Sterling.

Keep an eye on Friday’s release of PMI survey data for January as this will be the first major snapshot of how the UK and Eurozone economies performed in January.

The consensus looks for Eurozone output to have improved, driven by a recovery in Germany. This can bolster the Euro relative to the Pound.

The UK is meanwhile expected to show a slowdown in activity:

“Flash PMIs on Friday will likely show continued weak momentum; we expect the services PMI to drop to 50.5. But the details are as important as the headline now. The crucial question for the economic outlook and the MPC’s decisions is how much tax hikes are cutting employment or raising prices,” says Wood.

Our setup for the Pound-Euro is bearish owing to the event risks associated with the labour market data and the downbeat technical setup. However, we do note that some investment bank technical strategists now think weakness has gone too far and are looking to buy the pound against the euro at these levels.

“We go short EURGBP,” says a strategy note from Citi, citing expectations for a reversal in negative sentiment towards the UK.

However, we think this week will be too soon for sentiment to improve, given expectations for a poor labour market report.

Bitcoin price (BTCUSD) rallied upwards sharply to succeed touching our waited target at 108350.45$ and approached 110000.00$ barrier, and the way seems open to continue the rise to achieve additional gains that extend to 112000.00$, noting that breaking 104900.00$ will put the price under negative pressure to head towards testing key support levels that start at 98930.00$.

The expected trading range for today is between 106500.00$ support and 111000.00$ resistance.

Trend forecast: Bullish

FTSE rises to fresh record highs

• Attention is on Trump’s policy changes
• Rightmove data shows strong house price growth
• GBP/USD remains bellow 1.22
• FTSE rises to 8515

The Betsy has risen to a new record high, rising about Friday and closing at 8505, the previous record. The index was led higher by a broad range of sectors, including miners, banks, and utilities.

The FTSE 100 is supported after soft data last week, which reassured expectations that the Bank of England could cut interest rates more aggressively than the 1 cut the market had priced in.

GBP/US struggles below 1.22 at the multi-year low, which fits the multinationals that make up the large majority of the FTSE index.

Attention is on Donald Trump’s second inauguration and the measures he will implement immediately. While the UK isn’t necessarily in line for a direct hit from trade tariffs, it will likely be impacted indirectly should Trump adopt an aggressive stance. The US stock market is closed today.

The UK economic calendar is quiet, and figures from Rightmove have failed to buoy the house-building sector. Average asking prices for newly listed homes in the UK have seen the biggest start-of-the-year increase since 2020. According to Rightmove, the average price rose by 1.7% between December 8th and January 11th compared to the same period a year ago.

While the housing market gained some momentum on hopes that borrowing costs would continue to fall, the uncertainties surrounding BoE could limit gains going forward. The market is pricing two 25 basis point cuts this year, up from one at the start of last week. However, the BoE has guided towards four rate cuts.

FTSE forecast – technical analysis

The FTSE has broken out of range, rising above 8490 to fresh all-time highs. With blue skies above, buyers could consider the 8600 round number.

However, the RSI is very overbought, so buyers should be cautious some consolidation could be on the cards. Immediate support is at 8490 and 8400 below here. Should sellers take out 8325, the price returns to the familiar range within which it traded for much of the past 9-months.

USD/JPY holds steady in cautious trade ahead of Trump’s inauguration

• Attention is squarely on Trump’s inauguration
• BoJ could cut rates this week
• USD/JPY recovers from 155 support

USD/JPY is holding steady at the start of the new week as investors await cautiously ahead of chumps inauguration. President-elect Donald Trump is expected to make a flurry of policy announcements in the first hours of his second presidency. Meanwhile, the Bank of Japan is expected to hike interest rates at the end of the week.

Trump will take the oath at noon Eastern Time (19:00 GMT). He is expected to sign a slew of executive orders that will set the tone for his presidency. Monday is a US holiday, with stock markets closed for Martin Luther King Day. So, the forex market will see an immediate reaction to his inauguration pledges, while the stock markets will likely react when they open on Tuesday.

Where the US dollar goes from here greatly depends on how aggressively Trump implements trade tariffs and tax cuts. These measures are inflationary.  The USD has rallied on expectations of few rate cuts since Trump’s victory. Any sense of a more relaxed approach could pull the US dollar lower.

The USD fell last week after weaker-than-expected underlying US inflation saw the market ramp up Fed rate cut expectations. Dovish comments from Federal Reserve governor Christopher Waller also weighed on the USD.

The yen rallied last week on hints from the BoJ that a rate hike could be discussed at this week’s BoJ rate meeting.

Before the BoJ meeting on Friday, Japanese inflation data will be released.

USD/JPY forecast -technical analysis

USD/JPY eased back from a six-month high of 158.90 reached last week before finding support at 155.00, around the 50 SMA. The price holds steady around 156.20, while the RSI gives away few clues at its neutral level.

Buyers will need to rise above 156.20 and 157.00, the 78.6% Fib retracement level, to bring 158.90 into focus. A rise above here is needed to create a higher high and turn attention to 160.00.

Support is seen at 155.00, ahead of 154, the rising trendline dating back to 2022, and 153.30, the 61.8% fib retracement.