• The GBP/USD weekly forecast is optimistic after the US-UK trade deal.

• Some BoE policymakers were not ready to cut interest rates.

• The dollar had a solid week due to optimism about easing trade tensions.

The GBP/USD weekly forecast is optimistic, as the US-UK trade deal alleviates concerns about growth in Britain.

Ups and downs of GBP/USD 

The GBP/USD pair had a bullish week but closed below its highs due to dollar strength. The pound had a good week after the US signed a trade deal with the UK, leaving a baseline tariff of 10%. Moreover, the BoE policy meeting revealed that some policymakers were not ready to cut interest rates. As a result, rate cut expectations dropped. 

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However, the dollar also had a solid week after the Fed remained cautious and due to optimism about easing trade tensions. The US-UK deal opened the door for a US-China deal.

Next week’s key events for GBP/USD

Next week, market participants will focus on data from the UK, including employment, manufacturing production, and GDP. Meanwhile, the US will release figures on consumer inflation, retail sales, and wholesale inflation. 

The UK employment and GDP reports will shape the outlook for future Bank of England policy moves. Upbeat numbers will lower expectations for rate cuts, supporting the pound. On the other hand, cracks in the economy would pile pressure to cut rates. 

The same will happen in the US with inflation and sales data. Higher inflation and weak sales would reflect the impacts of Trump’s tariffs.

GBP/USD weekly technical forecast: Bulls retest the SMA line

On the technical side, the GBP/USD price has pulled back to retest the 22-SMA support after pausing near the 1.3401 resistance level. Despite the pullback, the price looks ready to bounce higher. It trades above the SMA, and the RSI is above 50, supporting a bullish bias. 

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GBP/USD has maintained a bullish trend for some time, despite puncturing the 22-SMA. At the same time, it has respected a support trendline below the SMA, bouncing to new highs from the line. The most recent high came near the 1.3401 key level. Here, the price paused to consolidate as the SMA caught up. 

Given the strong bullish bias, the price might break above 1.3401 next week for a higher high. Such a move would allow bulls to target the 1.3603 key level. 

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The EURJPY pair provided a positive signal by its rally above the barrier at 163.25, to record some gains by hitting the 163.90 level, to provide sideways trading to gather the positive momentum again.

We will depend on forming a new support base at 162.65 level, note that the attempt of surpassing 50 level will increase the chances for forming bullish waves, to expect reaching 164.20, to repeat the pressure on the resistance at 164.90.

The expected trading range for today is between 163.00 and 164.20

Trend forecast: Bullish

• GBP/USD trades in positive territory above 1.3250 early Friday.
• The Bank of England lowered the policy rate by 25 bps as expected.
• The near-term technical outlook points to a loss of bearish momentum.

Following a two-day slide, GBP/USD dropped toward 1.3200 early Friday and touched a fresh multi-week low before regaining its traction. The pair trades above 1.3250 in the European session but remains below key technical resistance levels.

The Bank of England (BoE) announced on Thursday that it cut the policy rate by 25 basis points (bps) to 4.25%, as widely anticipated. Unexpectedly, two policymakers voted in favor of holding the policy rate unchanged, while two others voted for a 50 bps cut. Meanwhile, the BoE noted in its policy statement that a gradual and careful approach to further withdrawal of monetary policy restraint remains appropriate.

Although GBP/USD edged higher with the immediate reaction to the BoE event, the broad-based US Dollar (USD) strength forced the pair to turn south during the American trading hours on Thursday. US President Donald Trump held a press conference to announce a trade deal with the UK and said that tariffs with China could be lowered, easing worries about a deepening trade conflict and supporting the USD.

Investors will pay close attention to comments from Federal Reserve (Fed) officials heading into the weekend. The CME FedWatch Tool shows that markets currently price in about a 14% probability of a 25 bps Fed rate cut in June. In case Fed officials adopt a hawkish tone and reiterate the need for patience with regard to rate cuts, given the uncertainty surrounding the inflation outlook, the USD could preserve its strength and cap GBP/USD’s upside.

In the meantime, investors could turn cautious ahead of the US-China trade talks this weekend. In this scenario, profit-taking toward the end of the European session could cause the USD to weaken against its rivals.

GBP/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart recovers toward 50, pointing to a loss of bearish momentum. Nevertheless, technical buyers could remain reluctant to bet on a leg higher until GBP/USD clears key resistance levels at 1.3275 (Fibonacci 23.6% retracement level of the latest uptrend) and 1.3310-1.3320 (20-day Simple Moving Average (SMA), 50-period, 100-period SMAs on the 4-hour chart). A daily close above the latter could open the door for additional gains toward 1.3400 (static level).

On the downside, interim support seems to have formed at 1.3230 (static level) before 1.3170 (Fibonacci 38.2% retracement) and 1.3150 (200-period SMA).

• EUR/USD rebounds following early decline, trades near 1.1250.
• The technical outlook suggests that the bearish bias remains unchanged in the near term.
• Market attention turns to comments from Federal Reserve policymakers.

EUR/USD remained under bearish pressure following Wednesday’s decline and lost more than 0.5% on Thursday. After touching its weakest level in nearly a month below 1.1200 in the Asian session on Friday, the pair stages a rebound and trades near 1.1250.

The Federal Reserve’s (Fed) hawkish tone helped the US Dollar (USD) gather strength against its rivals in the second half of the week. Additionally, the announcement of the UK-US trade deal further supported the USD, causing EUR/USD to push lower in the American trading hours on Thursday.

Early Friday, US stock index futures trade mixed, pointing to a cautious stance. The economic calendar will not feature any high-tier data releases but several Fed policymakers will be delivering speeches.

In case Fed officials reiterate the cautious approach to policy-easing, the USD could hold its ground and make it difficult for EUR/USD to gain traction heading into the weekend. According to the CME FedWatch Tool, markets currently see about a 17% probability of a 25 basis points Fed rate cut in June, suggesting that the USD has some room left on the upside if investors remain convinced that the Fed will wait until July to adjust the policy.

On the flip side, officials from the European Central Bank (ECB) hinted at the continuation of rate cuts, limiting the Euro’s gains. ECB policymaker Olli Reh said on Friday that the Eurozone’s growth outlook is weakening, while disinflation remains on track. Similarly, Governing Council member Gediminas Šimkus noted that there was downward pressure on inflation and added that a rate cut in June is needed.

EUR/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart stays near 40, suggesting that EUR/USD’s latest rebound was a technical correction rather than the beginning of a reversal.

On the downside, 1.1175 (Fibonacci 50% retracement of the latest uptrend) aligns as next support before 1.1080 (Fibonacci 61.8% retracement). Looking north, resistances could be spotted at 1.1270 (Fibonacci 38.2% retracement), 1.1350 (100-period Simple Moving Average) and 1.1380 (Fibonacci 23.6% retracement).

Copper price failed to settle above the extra support at $4.5400 by stochastic negative momentum, to push it to suffer several losses by hitting $4.4200, to settle below the moving average 55.

The continuation of the negative pressures makes us prefer more of the negative trading in the current period, to target $4.3200 level, while regaining the bullish bias requires forming strong bullish waves, to settle above $4.6600 level, which represents %50 Fibonacci correction level.

The expected trading range for today is between $4,3800 and $4.5800

Trend forecast: Bearish

USD/JPY Technical Analysis

The US dollar has flexed its muscles against the Japanese yen and it’s interesting that the 145 yen level has been like a brick wall. If we can make a fresh high above the early part of the week and the 50 day EMA, I think that will bring in a lot more buyers of US dollars and people willing to take advantage of the interest rate differential as it certainly favors the US dollar. At that point in time, we could be looking at a move to the 148 yen level. In the meantime, I think short-term pullbacks continue to be buying opportunities as it looks like we’re trying to base here.

AUD/USD Technical Analysis

The Australian dollar initially tried to rally but has given back gains. We are getting dangerously close to seeing a reversal here as well. A move below the 50 day EMA is enough for me. At that point in time, I start shorting. I think it was obvious after the Federal Reserve meeting that the Fed is not going to cut rates in June, unlike what most of the trading community seemed to be banking on.

And now, the odds of a rate cut later this year are starting to drop a little bit as well. People still believe in a couple of rate cuts coming out of the Federal Reserve, but at the same time, he made it pretty clear during the press conference yesterday that he really didn’t know what they were going to do because there were far too many variables out there that caused confusion.

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

May 8, 2025 – Written by Ben Hughes

STORY LINK GBP/USD Forecast: Pound Rebounds Against Dollar as BoE Strikes Cautious Tone

The Pound-to-Dollar exchange rate wavered on Thursday but ultimately found a foothold, bolstered by a slightly more hawkish tone from the Bank of England (BoE) and renewed optimism over UK-US trade ties.

At the time of writing, GBP/USD was trading around $1.3329, having rebounded from earlier lows following a turbulent twenty-four hours.

The Pound (GBP) initially struggled on Thursday ahead of the BoE’s widely expected interest rate cut, but quickly rallied as markets digested the tone of the central bank’s messaging.

While the Monetary Policy Committee (MPC) voted to reduce the Bank Rate by 25 basis points, the decision was not unanimous, with two members voting to keep rates unchanged.

This dissent, alongside only a modest revision to the BoE’s inflation outlook, hinted at a more cautious approach to future cuts than investors had anticipated. As a result, Sterling clawed back earlier losses and even advanced against some major peers.

Adding to the Pound’s resilience was the recent optimism around UK-US trade relations. After hinting at a deal overnight on Wednesday, President Donald Trump then confirmed that a ‘full and comprehensive’ deal between the UK and US would be the first agreement announced since he introduced his ‘liberation day’ tariffs.

Coming on the heels of a UK-India agreement and amid broader signs of rebuilding post-Brexit relations with the EU, markets welcomed the news as a potential positive for the UK economy.

Meanwhile, the US Dollar (USD) managed to avoid significant losses, helped by residual strength from Wednesday’s Federal Reserve decision. The Fed opted to keep interest rates steady, as expected, but struck a tone that suggested policymakers were in no hurry to ease monetary policy.

Fed Chair Jerome Powell reinforced this view during the post-decision press conference, indicating that the bank would prefer to wait and see how tariffs impact the US economy before acting again. He also flagged inflation risks as a key concern, which prompted investors to dial back expectations of a near-term rate cut.

This shift in outlook gave the US Dollar a lift midweek and helped it avoid steeper losses on Thursday, even as the Pound regained some traction.

Looking ahead, GBP/USD could remain sensitive to commentary from key central bank figures due to speak on Friday.

BoE Governor Andrew Bailey is due to speak in the morning, and any indication that the British central bank might speed up rate cuts if inflation cools more quickly could weigh on the Pound.

Later in the day, a string of speeches from Fed officials will be closely watched. If the messaging echoes Powell’s stance – favouring a cautious and data-driven approach – the US Dollar could remain supported. Conversely, if recession risks or concerns over the labour market come to the fore, the ‘Greenback’ may weaken.

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TAGS: Pound Dollar Forecasts

May 8, 2025 – Written by David Woodsmith

STORY LINK Euro to Dollar Forecast: “Remains Range Bound” Between 1.12-1.15

The Federal Reserve’s refusal to consider any near-term cut in interest rates has supported the dollar in global markets with the Euro to Dollar (EUR/USD) exchange rate trading around 1.1300 from 1.1270 lows.

The dollar is still being hampered by fragile underlying confidence.

ING commented; “We think there will be sustained support around the 1.1250-1.130 area in EUR/USD in the near term.”

According to Scotiabank; “EURUSD remains range bound, and its movement since mid-April has been limited between support in the mid-1.12s and resistance above 1.15.”

The Euro could gain some support if the trumpeted UK-US trade deal is short on content.

On a longer-term view, Natixis has an end-2025 EUR/USD forecast of 1.20; “As we anticipate a technical recession in the US economy, the dollar will resume its decline, given that it remains overvalued in terms of real effective exchange rates.”

The Federal Reserve held interest rates at 4.50% at the May meeting, in line with strong consensus forecasts.

Chair Powell commented that inflation and unemployment are both likely to increase due to the impact of tariffs.

Powell repeated recent commented that the inflation and employment goals are liable to be in tension which will make it difficult for the central bank to set policy.

His key message, however, was that the Fed needed to be patient and wait for the economic data to judge the correct policy response.

Commonwealth Bank of Australia head of international and sustainable economics Joseph Capurso commented; “The FOMC does not want to pre-empt changes in the U.S. economy – it wants to wait for ‘hard’ economic data to guide its policy actions.”

He added; “From here, we expect communication from Chair Powell and other FOMC members to focus on making sure inflation expectations are anchored.”

There has been a sharp shift in market pricing with traders considering that the chance of a June rate cut has dipped to near 20%.

As far as US data is concerned, US initial jobless claims declined to 228,000 from 241,000 the previous week and slightly below consensus forecasts of 230,000 while continuing claims retreated to 1.88mn from 1.91mn.

According to ING; “Another hold from the Federal Reserve with an acknowledgement that uncertainty has increased with more upside risk for both inflation and unemployment. This suggests little inclination to move until they are confident of the direction the data is heading, meaning rate cuts could be delayed, but risk being sharper when they come.”

MUFG took a similar view; “We expect the Fed to resume rate cuts when evidence emerges that the US labour market is loosening in response to trade disruption and heightened policy uncertainty supporting our outlook for further US dollar weakness in the 2H of this year.”

According to the bank; “A delay to Fed rate cuts may help to offer some much needed support for the US dollar in the near-term although the link with short-term yield spreads has broken down recently.”

ING noted that the dollar still trades with a sizeable risk premium.

It added; “In EUR/USD that translates into around 4% overvaluation in our estimates, but the path to make markets comfortable with a substantially smaller risk premium isn’t going to be smooth. A constant flow of positive news on trade risk de-escalation is necessary, but probably not sufficient in the face of the damage markets think tariffs are already inflicting on the US economy.”

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TAGS: Euro Dollar Forecasts

• The euro has rallied quite nicely during the trading session on Wednesday against the Japanese yen as we had bounced from a significant support level.
• The 200 day EMA is sitting right there right along with the 50 day EMA in fact, it looks like they are getting ready to cross and that suggests that we are going to see the golden cross soon.
• This is a market that probably tries to go higher based on this, assuming that we have the overall attitude staying in the market, which looks like it is favoring shorting the Japanese yen with some of the better performing currencies such as the Euro.

A rally from here probably opens up the possibility of a move towards the 165 yen level, which has been like a pretty significant ceiling here for some time. If we can clear that level, then we have the chance of breaking out. Underneath, if we were to break down below the moving averages, then we could move down to the 160 yen level, which is basically the middle of the overall consolidation.

Three Levels I am Watching

You’ll notice on the charts that I have the 155 yen level and the 165 yen level drawn out with the 160 yen level right in the middle, you can see where price has flipped there multiple times. The interest rate differential does favor the euro, although not drastically, but at the end of the day, that is something that matters.

Furthermore, I am starting to see the Japanese yen give up some of its grip on other currencies, so that might translate into higher prices here as well. Keep in mind that the Bank of Japan recently flinched when it came time to tighten monetary policy, and it’s difficult to imagine a scenario where traders forget that. I do favor the upside.

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• Ahead of the Bank of England’s announcement today, Thursday, the GBP/USD currency pair is attempting to maintain its upward rebound gains, which reached the 1.3400 resistance level before the pound/dollar price stabilized around the 1.3285 level at the time of writing this analysis.
• According to Forex market trading, market participants appeared cautious, avoiding any significant moves before the Bank of England’s (BoE) widely anticipated interest rate announcement later this afternoon.
• However, Sterling trading found some support, buoyed by optimism surrounding the UK-India trade agreement, which lifted sentiment regarding the UK’s economic prospects ahead of the central bank’s upcoming decision.

Is the British Pound at Risk of a Rate Cut Today?

Forex market experts anticipate a surprise today, Thursday. The Bank of England’s interest rate meeting is widely expected to result in a 25-basis point cut to 4.25%. However, some analysts see a possibility of a more aggressive move. Moreover, what has caught the attention of Bank of England watchers is the unusual number of Monetary Policy Committee (MPC) members scheduled to deliver speeches in the aftermath of the decision.

Typically, the speaker list is distributed over the following weeks. If the British central bank decides to cut the interest rate by 50 basis points, it will need to convey a strong message and narrative for this move. This is because such a cut would come against a backdrop of elevated inflation, pushing the bank further away from its 2.0% target. Therefore, a 50-basis point rate cut would risk its credibility and require policymakers to do some serious “marketing” of the decision.

Regarding currency prices and the British pound, a 50-basis point rate cut would be surprising and would initially lead to a sharp downward adjustment. The pound might soon recover its losses if financial markets perceive the 50-basis point rate cut as a pre-emptive move that reduces the need for further cuts later. This makes the possibility of a rate cut in June plausible and could explain the flurry of messages from MPC speakers in the following days.

More interest rate cuts, at a faster pace, would negatively impact the British pound.

According to some currency experts, “A more dovish update from the Bank of England could cause a setback after the pound’s recent recovery, although the recent dovish repricing would cushion any sterling sell-off if there is a slight change in guidance.” However, economists warn that the bank risks its reputation by trying to boost growth with rate cuts at the expense of its inflation responsibility.

Trading Tips:

Keep in mind that the British pound still has strong factors, and any pullback could be opportunities for bargain hunters to buy.

For his part, Andrew Sentance, a former member of the Bank of England’s Monetary Policy Committee, believes that now is not the right time to cut interest rates, as he expects inflation to rise to 4-5% in the coming months. Higher national insurance contributions for companies are considered a major driver of costs facing businesses, which are expected to be passed on to consumers. Meanwhile, food prices are expected to start rising again, ending a period of negative food price inflation that recently helped the Bank of England.

On the other hand, the British pound will receive support if the Bank of England continues to signal satisfaction with the pace of its current quarterly interest rate cuts. This comes amid continued declines in financial market volatility, as investors remain optimistic about the prospects for trade deals after “Liberation Day.”

Technical Analysis for the GBP/USD pair today:

According to the performance on the daily timeframe chart, the GBP/USD trading has remained on its path to a bullish shift, and the 1.3400 resistance will remain a catalyst and confirmation of the bulls’ strong control. According to the 14-day Relative Strength Index (RSI) reading around the 60 level, this confirms the upward shift but has not yet reached the overbought zone, and the MACD indicator for the 12.26 closing is still in the overbought zone. Over this time frame, a break of the upward trend will not occur without the bears moving the currency pair to the vicinity of the support levels of 1.3240 and 1.3180, respectively. Caution is advised, as if the pound does not gain momentum today, the GBP/USD pair may be subject to profit-taking selloffs.

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