July 27, 2025 – Written by David Woodsmith

STORY LINK Pound-to-Dollar Forecast: “GBP Strength was Short-lived”

Stagflation Fears Continue to Undermine Pound Support, GBP/USD Risks Key Downside Break

The Pound to Dollar exchange rate (GBP/USD) dipped towards 1.3500 on Thursday and retreated below this level in early Europe on Friday with further selling.

The dollar has secured net gains in global markets while the UK data has not provided Pound support.

Overall risk appetite has also stumbled on Friday which has also unsettled the Pound and GBP/USD has posted sharp losses to lows at 1.3425.

According to UoB; “upward momentum has largely faded. To look at it another way, the GBP strength was short-lived.”

It considers that the break below 1.3450 would increase the risk of further selling.

Key support for the Pound is close to 1.3370 and any break below this level would cause further important damage to the outlook.

Bank of America commented; “To say that GBP has had an inauspicious start to H2 is an understatement.”

UK retail sales volumes increased 0.9% for June after a revised 2.8% slide for May, but slightly below consensus forecasts of a 1.2% gain for the month.

There was a rebound in food sales after a sharp decline previously.

According to the ONS; “The warm weather in June helped to brighten sales, with supermarket retailers reporting stronger trading and an increase in drink purchases. It was also a good month for fuel sales as consumers ventured out and about in the sunshine.”

RSM head of retail Jacqui Baker noted that there was still an important element of caution; “While the June figures are welcome news and consumer confidence ticked up last month, nervousness among consumers persists, and the unexpected rise in inflation won’t have helped. The higher price of essentials such as food and fuel will only add to the reluctance among consumers to spend as their discretionary income shrinks.”

The latest GfK consumer confidence index reported a slight decline to -19 for July from -18 the previous month.

There was significant evidence of caution with consumers ramping up savings to the highest level since 2007.

Neil Bellamy, consumer insights director at GfK, commented; “With speculation growing over possible tax rises in the Autumn budget, and price pressure contributing not just to higher inflation already but also to the likelihood of worse inflation to come, the news is worrying.”

According to MUFG; “The PMI data was for July and underlines the likelihood that the UK economy has got off to a weak start in Q3.”

It added; “This grim news was clearly more impactful than the positive news of a trade deal being confirmed between the UK and India.”

ING noted that survey evidence has indicated economic vulnerability and a weaker labour market at the same time as on-going upward pressure on prices.

It commented that; “The latest UK Purchasing Managers’ Index (PMI) perfectly encapsulate the headache the Bank of England faces right now.”

The bank added; “Which of these trends – higher inflation or lower hiring – matters more? This is not a new debate and one that’s far from resolved, setting up another divisive August Bank of England meeting. We wouldn’t be at all surprised to see another three-way vote split, akin to what we saw in May.”

According to the IMF; “In an environment of weak growth, persistent inflationary pressures may create “stagflation” risks, complicating the monetary policy stance and putting pressure on public finances.

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TAGS: Currency Predictions Pound Dollar Forecasts

• The USD/JPY weekly forecast points to cautious tones from Powell and Ueda.

• The yen gained after Prime Minister Ishiba said he would stay on.

• A surprise trade deal between Japan and the US boosted the yen.

The USD/JPY weekly forecast points to cautious tones during next week’s Fed and Bank of Japan policy meetings.

Ups and downs of USD/JPY

The USD/JPY price ended the week red but far above its lows. The price fluctuated throughout the week as traders focused on elections, tariffs, and economic data. The ruling party in Japan lost its majority in the upper house. However, the yen gained after Prime Minister Ishiba said he would stay on.

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Meanwhile, a surprise trade deal between Japan and the US further boosted the yen. It lowered Japan’s reciprocal tariff from 25% to 15%. However, the pair reversed its decline after unemployment claims data revealed resilience in the US labor market, pushing the dollar higher.

Next week’s key events for USD/JPY

Next week, the US will release its GDP report, business activity data, and the nonfarm payrolls. At the same time, traders will focus on the FOMC policy meeting for clues on the next rate cut. Meanwhile, the Bank of Japan is also set to meet on Thursday. 

Both the Fed and the BoJ are likely to keep delaying their next moves due to the impact of Trump’s tariffs. Therefore, Powell might remain cautious about rate cuts while Ueda will remain cautious about rate hikes.

USD/JPY weekly technical forecast: Bulls retarget the 149.01 resistance level 

On the technical side, the USD/JPY price is bouncing towards the 149.01 resistance after retesting the 22-SMA support line. The price has been in a corrective move between a key support trendline and the 149.01 key resistance level. Within this area, the price has chopped through the SMA, a sign that bears and bulls are almost equally matched. 

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The corrective move came after a downtrend that paused at the 140.01 support level. Therefore, it might only be a pause as bears regain momentum. If this is the case, the price will likely soon break below the support trendline. To retest the 140.01 support. Such a move would also allow the previous downtrend to continue. 

On the other hand, if bulls are ready to take charge, the price will break above the 149.01 key resistance level. This would allow USD/JPY to retest the 154.02 resistance level.

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The CADCHF pair declined in its last intraday levels, to gather the gains of its previous rises, attempting to gather bullish momentum that might assist it to breach the critical resistance at 173.25, and attempting to offload some of its clear overbought conditions on the (RSI), especially with the beginning of negative overlapping signals appearance, amid the continuation of the positive support due to its trading above EMA50, and under the dominance of the main bullish trend on the short-term basis.

Therefore, our expectations suggest a rise in the (CADCHF) price in its upcoming intraday trading, conditioned by breaching the mentioned resistance at 173.25 initially, to target its next resistance at 174.35.

The expected trading range for today is between 171.85 support and 173.80 resistance.

Trend forecast: Bullish

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July 25, 2025 – Written by Frank Davies

STORY LINK Pound to US Dollar Forecast: Long-term GBP/USD Uptrend Faltering Again?

The Pound to Dollar (GBP/USD) exchange rate pushed to a peak just below 1.3590 before a retreat to near 1.3550.

The latest UK data triggered some fresh unease over the outlook and hampered the Pound, but dollar confidence remained weak amid signs of higher inflation which would intensify the debate surrounding Federal Reserve policy.

Scotiabank considers that the long-term GBP/USD uptrend could be faltering again and added; “We look to a near-term range bound between 1.3500 support and 1.3580 resistance.”

According to UoB; “Although the outlook for GBP remains positive, short-term conditions are deeply overbought, and the next resistance at 1.3650 is unlikely to come into view so soon.”

On a longer-term view, Danske Bank expects that GBP/USD will creep higher to 1.38 on a 12-month view.

As far as UK data is concerned, the UK PMI manufacturing index edged higher to a 6-month high of 48.2 for July from 47.7 previously and just above consensus forecasts.

The services-sector index, however, dipped to a 2-month low of 51.2 from 52.8 in June and compared with expectations of no change for the month.

The CBI industrial trends index improved slightly to -30 for July from -33 previously, but this was below consensus forecasts of -27 and indicated further stresses in the manufacturing sector.

The ONS also reported that UK vehicle production in the first half of 2025 slumped to the lowest level since 1953.

The issue of US interest rates and Fed independence will remain a key market concern.

Markets remain very confident that there will be no change in interest rates at next week’s meeting and the potential for a September rate cut has also drifted lower to near 35%.

There are still important concerns surrounding political pressure on the Fed with the future of Chair Powell still a major talking point.

There has been further speculation that the Administration will find a pretext to dismiss Powell or undermine his authority.

Rabobank commented; “Later today, Trump will visit the Fed to take a look at the construction site where the $2.5 billion renovation project is taking place that could become the “cause” that the Trump administration is looking for to fire Powell if they want to get rid of him before his term as Fed Chair expires in May 2026. That should certainly move the process to find a new Chair into high gear.”

The latest US data will complicate the argument surrounding Federal Reserve policy and Administration demands for lower interest rates.

The PMI manufacturing index dipped to a 7-month low of 49.5 for July from 52.9 and below consensus forecasts of 52.7.

The services-sector index, however, increased to a 7-month high of 55.2 from 52.9 in June.

Overall business confidence dipped again with the second-weakest reading for 30 months.

Costs increased at the second-highest rate since January 2023 while output charges increased at the second-highest rate since September 2022.

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence noted a strong start to the third quarter, but commented; “Whether this growth can be sustained is by no means assured. Growth was worryingly uneven and overly reliant on the services economy.”

On inflation, he added; “The rise in selling prices for goods and services in July suggests that consumer price inflation will rise further above the Federal Reserve’s 2% target in the coming months as these price hikes feed through to households.”

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USD/JPY Technical Analysis

The US dollar has raised higher against the Japanese yen during the trading session on Friday to touch the 148 yen level and by extension, the 200 day EMA. This is a market that I do think breaks out eventually, but as things stand right now, it is rather difficult to get above here. If we do, then the 149 yen level is your next target. Anything above there opens up the floodgates. I expect to see that sooner or later, I just don’t know if we’ll see it right at this moment.

AUD/USD Technical Analysis

The Australian dollar has fallen yet again against the US dollar to reach the 0.6550 region yet again. We are in a fairly obvious uptrending channel, we are right in the middle of it, so this is about as neutral as it gets. Longer term, it does look like we want to go higher, but it’s more of a grind, it’s not really a huge move that I think it is going to push this market, I think it’s going to lull people to sleep for some time. And in fact, if you draw the channel out a little bit, maybe make it a little bit longer in time, you can even make an argument that we’re just continuing the same channel we were in before that big dip in early April, with the tariffs being announced.

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

The (ETHUSD) price declined in its last intraday trading, to attempt to offload some of its clear overbought conditions on the (RSI), especially with the beginning of the negative signals emergence, to gather its positive strength that might assist it to recover and rise again, leaning on the support of its EMA50, amid the dominance of the main bullish trend and its trading alongside a minor bullish bias that supports this trend.

Therefore, our expectations suggest a rise in the (ETHUSD) price in the upcoming intraday trading, conditioned by the stability of the support at $3,500, to target the critical resistance level at $3,800.

The expected trading range is between $3,450 support and $3,800 resistance.

Today’s forecast: Bullish

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The (ETHUSD) price declined in its last intraday trading, to attempt to offload some of its clear overbought conditions on the (RSI), especially with the beginning of the negative signals emergence, to gather its positive strength that might assist it to recover and rise again, leaning on the support of its EMA50, amid the dominance of the main bullish trend and its trading alongside a minor bullish bias that supports this trend.

Therefore, our expectations suggest a rise in the (ETHUSD) price in the upcoming intraday trading, conditioned by the stability of the support at $3,500, to target the critical resistance level at $3,800.

The expected trading range is between $3,450 support and $3,800 resistance.

Today’s forecast: Bullish

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Copper price declined in its last intraday trading, due to the stability of the resistance level at $5.89, attempting to look for a rising low to take it as a base that might assist it to gain the required positive momentum to help it to breach this resistance, to lean on the support of a minor bullish trend line on the short-term basis, amid the continuation of the positive pressure that comes from its trading above EMA50, besides the (RSI) reach to oversold levels, exaggeratedly compared to the price movement, suggesting the beginning of forming positive divergence, intensifying the positive pressure on the price.

Therefore, our expectations suggest a rise in (copper) price in its intraday trading, especially when breaching the mentioned resistance at $5.89, to target the next resistance level at $6.1820.

The expected trading range for today is between $5.7344 and $6.0500

Trend forecast: Bullish

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• GBP/USD trades in negative territory below 1.3500 after posting losses on Thursday.
• The technical outlook highlights a buildup of bearish momentum in the short term.
• Retail Sales in the UK rose at a softer pace than expected in June.

GBP/USD came under bearish pressure on Thursday and lost more than 0.5%, snapping a three-day winning streak in the process. The pair extends its slide on Friday and trades below 1.3500.

The renewed US Dollar (USD) strength weighed on GBP/USD on Thursday. The US Department of Labor reported that the number of first-time applications for unemployment benefits declined to 217,000 in the week ending July 19 from 221,000 in the previous week. This reading came in better than the market expectation of 227,000. Additionally, the S&P Global Composite Purchasing Managers Index (PMI) improved to 54.6 (preliminary) in July from 52.9 in June, reflecting an ongoing expansion in the private sector’s business activity, at an accelerating pace.

Meanwhile, the EUR/GBP cross rose more than 0.3% on Thursday as the Euro benefited from the European Central Bank’s (ECB) cautious tone on policy-easing. EUR/GBP preserves its bullish momentum and trades at its highest level since early April above 0.8700 on Friday, suggesting that the Euro continues to capture capital outflows out of Pound Sterling.

Early Friday, the UK’s Office for National Statistics reported that Retail Sales rose by 0.9% on a monthly basis in June. This reading followed the 2.8% decrease recorded in May but came in worse than the market expectation for an increase of 1.2%, making it difficult for GBP/USD to stage a rebound.

In the second half of the day, Durable Goods Orders data for June will be the only data featured in the US economic calendar. Nevertheless, this data is unlikely to have a long-lasting impact on the USD’s valuation.

GBP/USD Technical Analysis

GBP/USD broke below the 100-period and the 200-period Simple Moving Averages (SMAs) on the 4-hour chart and the Relative Strength Index (RSI) indicator dropped below 40, pointing to a bearish tilt in the near term.

In case GBP/USD confirms 1.3470 (Fibonacci 50% retracement of the latest uptrend) as resistance, 1.3400 (Fibonacci 61.8% retracement) could be seen as the next support level before 1.3340. On the upside, resistance levels could be spotted at 1.3520 (100-period SMA) and 1.3540-1.3550 (Fibonacci 38.2% retracement, 200-period SMA).

• The US dollar initially fell during the trading session on Thursday but then found enough support near the 50-day EMA to really get things moving and open up the possibility of a rebound.
• The 50-day EMA sits right there at the 146 yen level as well, and I think that is something worth noting and maybe even something you can use in your analysis.

Ultimately, this is a market that given enough time, I believe probably opens up the possibility of a move towards the 200 day EMA, which sits right around the 148 yen level. This is how I have been approaching it. The market participants out there will continue to look at this through the prism of interest rate differential over the longer term, and with so much foreign capital flowing into the United States, it does make a certain amount of sense that the US dollar benefits against the Japanese yen specifically. That being said, if we break the 148 yen level, it then opens up the possibility of a move to the 149 yen level where we had peaked recently. I would anticipate a lot of issues in that area if we can get there.

On a Move Lower

A breakdown below the 50 day EMA opens up the possibility of a move down to the 144 yen level, but that’s not necessarily something that I’m looking for at the moment. I recognize this is a market that will probably continue to be very noisy and choppy, but that is typical for this pair regardless.

So with that, I like this buying of the dip as we had tried to break out, but overall, I think this is probably more of a grind to the upside and it will take significant time to reach its destination.

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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.