July 8, 2025 – Written by David Woodsmith

STORY LINK Pound-to-Dollar Forecast: GBP Below 1.36 on Net USD Gains

The latest tariff developments have not undermined the US Dollar while medium-term budget fears continue to erode Pound Sterling support.

The Pound to Dollar exchange rate (GBP/USD) failed near 1.3650 on Tuesday and dipped back below 1.3600 with lows at 1.3570.

According to UoB; “While downward momentum has increased further, we prefer to wait for GBP to close below 1.3560 before expecting a move to 1.3510. On the upside, the ‘strong resistance’ level is now at 1.3700.”

Scotiabank is still broadly bullish on GBP/USD, but added; “The latest pullback is worrisome, however, and we highlight the importance of the 50 day MA (1.3481) as a critical source of medium-term support. We look to a near-term range defined by 1.3550 support and 1.3650 resistance.

A break below 1.3650 would push the pair to 2-week lows, increasing the risk of a slide towards 1.3400.

The US Administration announced 25% tariffs for Japan and South Korea as the first batch of tariff letters was released. The deadline, however, was pushed back to August 1st from July 9th.

Overall risk appetite held firm despite the announcements while there were hopes that tariffs would be watered down, lessening the threat of a severe US downturn.

According to Barclays currency strategist Skylar Montgomery Koning; “The fact that some of the more problematic policies from the US administration have been dialled back — and there are deals getting done — means that the economic pain for the US won’t be as bad as originally feared.”

Scotiabank added; “the August 1 deadline means another punt and time for more negotiations before the hammer drops. Secondly, the delay to August for all reciprocal tariffs now means the impact on the US economy may not be felt until much later in the year.”

The US NFIB small-business confidence index declined marginally to 98.6 for June from 98.8 previously and fractionally below consensus forecasts with concerns over excess inventories a key negative factor.

The NFIB commented on interest rates; “Inflation remains stubbornly above the Federal Reserve’s target, therefore the policy rate remains over 4 percent with the possibility of cuts getting pushed down the road. The President wants a lower rate, and sometime this fall, market conditions will likely justify a rate cut by the FOMC.”

The UK Office for Budget Responsibility (OBR) has warned over the medium-term fiscal outlook and criticised the lack of effort to bring borrowing back under control after two major shocks.

According to the OBR; “Planned tax rises have been reversed, and, more significantly, planned spending reductions have been abandoned. The more persistent fiscal deficits and ratcheting up of debt that resulted have been accommodated by successive loosening of the fiscal rules.”

Scotiabank commented; “market participants remain concerned about domestic political developments and ongoing uncertainty related to the fiscal outlook as UK yields hit fresh highs. Media are focusing on the OBR’s latest report highlighting shifts in the distribution of UK government debt holders.”

The UK 10-year bond yield increased to just above 4.65% early in the day before edging lower to 4.62%.

According to the OBR, the UK is facing the 3rd highest borrowing costs among 36 major economies which will maintain upward pressure on debt-servicing costs.

Jefferies strategist Mohit Kumar commented; “Our view remains negative on the growth and fiscal picture in the UK. The government will have no choice but to increase taxes, but we (are) reaching a point where further tax rises can be counterproductive.”

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TAGS: Pound Dollar Forecasts

July 8, 2025 – Written by Ben Hughes

STORY LINK Pound to Dollar Forecast: USD, Stocks Rally Despite Trump Tariff Threats

The Pound US Dollar exchange rate held steady as a risk-on market mood underpinned GBP/USD on Tuesday.

At the time of writing, GBP/USD was trading at approximately $1.3612, virtually unchanged from the start of Tuesday’s session.

The US Dollar (USD) weakened against most major currencies on Tuesday after President Donald Trump announced an overnight extension to the deadline for implementing global tariffs, pushing it from 9 July to 1 August.

Rather than sparking concern, the announcement was met with a wave of optimism during the European session, fuelling a broad risk-on rally.

Investors appeared largely unconcerned by the delay and prospects of additional tariffs.

The market’s muted reaction reflected a growing sense of fatigue toward tariff threats, which have become a recurring theme of Trump’s trade strategy but are often softened or reversed.

As Wind Shift Capital’s Bill Blain put it: ‘A year ago, the idea that a sovereign nation would blithely impose crippling global tariffs on its long-standing friends, allies, and competitors, and expect them to bend over and say, “Thank you sir, may I have some more”, would have been dismissed as the mad haverings of a dystopian crackpot. Today, it’s happening, and no one bats an eyelid. That’s because markets have concluded that last night’s tariffs are “just another TACO (Trump Always Chickens Out) ploy.”’

As such, the US Dollar lost ground as investors sought out riskier assets, shrugging off the latest tariff headlines.

The Pound (GBP) lacked clear momentum on Tuesday, with the absence of UK economic data leaving it to drift in response to global risk appetite.

As market sentiment improved, traders turned towards riskier assets, which weighed on Sterling against its risk-sensitive counterparts.

Although the Pound has increasingly shown risk-sensitive traits, it failed to attract the same level of demand as its more volatile counterparts in the buoyant trading conditions.

With no domestic catalysts to steer direction, Sterling traded in a narrow range, influenced more by shifting investor mood than by any economic developments.

Looking ahead to Wednesday’s European session, movement in the GBP/USD exchange rate is likely to be shaped by the release of the latest minutes from the Federal Reserve’s FOMC meeting.

If the minutes reinforce expectations for a cautious approach to future US interest rate cuts, the US Dollar may strengthen later in the day.

Meanwhile, the UK’s economic calendar remains quiet, offering little domestic impetus for Sterling.

In the absence of fresh data, GBP is expected to remain directionless, with broader market sentiment continuing to guide its path.

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The EURJPY pair resumed the bullish attempts, taking advantage of its repeated stability above the extra support at 169.10, reaching the previously suggested target at 171.60, to face the resistance of the main bullish channel, which forces it to form a sideways fluctuation by its rebound to 171.30.

Due to the strength of the current resistance we expect entering instability station by the contradiction of the resistance stability against the main indicators attempts to provide the positive momentum, while resuming the bullish attack requires forming new bullish wave to settle above 172.00 level, to open the way towards recording extra gains that might begin at 172.80 reaching 173.90.

The expected trading range for today is between 170.45 and 171.90

Trend forecast: Fluctuated within the bullish track

Copper price attempted to surpass stochastic negativity by its stability yesterday above $4.9000 level, which forms 68.00%Fibonacci correction level, to reinforce its stability within the bullish channel’s levels, extending its support to $4.8400.

Note that the continuation of the main indicator’s contradiction might push the price to provide weak sideways trading, but the bearish correctional suggestion will remain valid, depending on the stability of the barrier at $5.1000, to expect testing the bullish channel’s support, then monitor its behavior to detect the expected trend on the upcoming trading.

The expected trading range for today is between $4.8650 and $5.0000

Trend forecast: Fluctuated within the bullish track

The EURJPY pair resumed the bullish attempts, taking advantage of its repeated stability above the extra support at 169.10, reaching the previously suggested target at 171.60, to face the resistance of the main bullish channel, which forces it to form a sideways fluctuation by its rebound to 171.30.

Due to the strength of the current resistance we expect entering instability station by the contradiction of the resistance stability against the main indicators attempts to provide the positive momentum, while resuming the bullish attack requires forming new bullish wave to settle above 172.00 level, to open the way towards recording extra gains that might begin at 172.80 reaching 173.90.

The expected trading range for today is between 170.45 and 171.90

Trend forecast: Fluctuated within the bullish track

July 8, 2025 – Written by Tim Boyer

STORY LINK Pound to Dollar Forecast: Trend Bullish, but “Near-term Pullback Possible”

GBP/USD short-term technicals remain bullish/neutral according to foreign exchange forecasters at Scotiabank.

“The multi-month trend remains bullish, but we are looking to the possibility of a near-term pullback from recent multi-year highs.”

US trade developments are likely to dominate in the short term with US Administration announcements on tariffs ahead of the July 9th deadline.

ING commented; “FX markets are preparing for a noisy week on trade.”

Meanwhile, the Pound is still vulnerable on fiscal grounds. The Pound to Dollar (GBP/USD) exchange rate dipped to lows at 1.3575 before settling close to 1.3600.

UoB commented; “Overall, only a breach of the ‘strong resistance’ at 1.3750 (no change in level) would indicate that the likelihood of GBP breaking clearly below 1.3560 has faded.”

Scotiabank, however, maintains a positive underlying stance on the Pound; “We remain bullish GBP and see no reason to make changes to our longer-term forecast targeting 1.40 by year-end 2025.”

US trade developments are likely to dominate in the short term.

On Monday, President Trump is set to start releasing letters informing countries of their tariff rates while last-minute negotiations will continue.

There have, however, also ben indications that tariffs would not come into effect until August 1st which would leave time for further negotiations.

Convera senior corporate FX dealer James Kniveton commented; “Market volatility appears inevitable when the pause officially ends and new tariff levels are announced.”

Nevertheless, he added; “the impact may prove more muted this time. Unlike previous announcements where tariff levels exceeded expectations, current proposals are largely anticipated. Moreover, markets appear to be pricing in continued deadline extensions.”

According to ING; “Threats of a resumption of 50% tariff levels could briefly hit the benign risk environment, although with a market already positioned underweight the dollar, the dollar might not have too far to fall.”

MUFG noted the risk of complacency given Administration unpredictability; “The ‘Trump Always Chickens Out’ (TACO) theory is certainly part of why investors show limited concerns. Hence, there is a risk of surprise for the markets if over the coming days the tariffs prove more aggressive than expected.”

It added; “More aggressive action will likely see some milder degree of repeat of what happened in April after ‘Liberation Day’ while a more benign scenario should push US Treasury yields lower, fuel stronger speculation of Fed rate cuts that would result in moderate dollar selling.”

Overall confidence in the Pound remains fragile amid fiscal and monetary policy reservations.

Expectations of tax increases in the Autumn budget have intensified further with some reports that tax increases of £20bn would be needed in the Autumn budget to meet current fiscal rules.

UBS economist Dean Turner commented; “We learned last week that any attempt to curb spending is going to prove almost impossible for this government, even with such a large majority. This inevitably means taxes are going up. The sooner the government is honest with the public and gets the deed done, the better.”

Turner downplayed the risk of selling in the UK bond market; “For investors in the gilt market, the volatility is likely here to stay for the time being. But this does not mean gilts do not look attractive, especially relative to cash, as interest rates will be much lower by the time the government’s second anniversary comes around.”

Scotiabank still has confidence in the Pound; “We see Wednesday’s political turbulence as a short-lived event with no lasting impact, given PM Starmer’s expression of continued support for Chancellor Reeves as both the PM and Chancellor seek to reinforce their commitment to fiscal responsibility in the UK.”

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• The US dollar has screamed higher against the Japanese yen during trading here on Monday, as we continue to see a lot of back and forth, perhaps base building in this market.
• But of course, Donald Trump has announced tariffs on South Korea and Japan starting August 1st of 25%.
• And that has people running towards the dollar and away from Asian currencies.
• This had already started earlier in the day, so there was probably a leak somewhere.

But ultimately, when you look at the price action, none of this should be a surprise because quite frankly, we have seen a lot of back and forth trading between 142 yen and 148 yen.

Range Trading

Ultimately, I think you have a situation where traders will continue to look at this as somewhat range bound and perhaps try to build a floor in the market as this is an area that previously had been very important also. With all of this, I think you have to look at this through the prism of just more of the same. It’s really not until we break above the 148 yen level that I think things change drastically. In that environment, then I believe that the US dollar goes looking to the 150 yen level, followed by 158 long-term.

Remember, you get paid to hang on to this pair via interest rate swap at the end of every day. And I think a lot of traders will be attracted to that in an environment that is uncertain to say the least. Rates have spiked in the U.S. as bonds have sold off. So that swap is only going to end up getting bigger at this point. The Bank of Japan, on the other hand, has its own issues with the bond market in Japan that nobody seems to be willing to bid on occasionally, which is disastrous for a currency. All things being equal, this is a market that is range bound, but I still favor the upside.

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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.

• The euro has fallen pretty significantly during trading here on Monday, as we continue to see a little bit of profit taken in a market that has gotten a bit overstretched.
• Furthermore, the noise coming out of the White House has caused a little bit of chaos in the market, at least later in the day as the White House is now claiming a 25 % tariff on South Korea and Japan is coming in August.
• While that doesn’t, at least in theory, directly influence the euro, it suggests that we still have a long way to go before we have any sense of certainty.

Nonetheless, this is a market that’s been bullish for a while. And I do think you have a situation where you have to look at this through the prism of just simply taking a bit of a breather.

Euro is Overdone

Quite frankly, the market had been rather overdone. So, it doesn’t surprise me at all that we would see this market then perhaps try to fall in order to really see a collecting a profit, if you will, the 1.16 level is an area that I anticipate should offer pretty significant support based on not only psychology, but also the idea of market memory.

If we break down below there, then we start to target the 50 day EMA near the 1.1450 level. And that is an area that I think a lot of technical traders will be watching. If we get below there, then look out below, we really could start to change the trend. All things being equal though, I think we’ve got a situation where the euro continues to attract inflows. And if that ends up being the case, then I’m willing to buy the dip, especially near the 1.16 level, where I would be very interested in seeing a bounce that I can take advantage of if in fact we get it.

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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.

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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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.