April 8, 2025 – Written by Tim Boyer

STORY LINK Pound Sterling Forecast: GBP Recovers vs EUR USD, Next US-China Moves Crucial

Trade considerations have continued to dominate on Tuesday with a further net recovery in risk appetite.

Markets overall are slightly more confident that there will be bilateral negotiations to ease the impact of US “reciprocal” tariffs, but there is still a very high degree of uncertainty.

The next move is likely to be determined by the US-China trade war. Risk appetite will surge further if China or Trump blink, but there are likely to be fresh losses in equities if neither side back off.

After sliding to 1-month lows near 1.2700, the Pound to Dollar (GBP/USD) exchange rate has recovered to 1.2785.

The Pound to Euro (GBP/EUR) exchange rate has recovered from 8-month lows below 1.1650 to trade around 1.1670.

Reservations surrounding the UK economic outlook have also increased, limiting Pound recovery potential.

Markets have also now fully priced in a rate cut at the May Bank of England meeting and there have been some calls for a 50 basis-point cut.

According to Scotiabank; “The loss of rate support adds to near-term downside risk for GBP.”

The 30-year UK bond yields edged higher again on Tuesday amid speculation that the government would eventually relax fiscal rules.

Monex noted that this was; “a notable concern for markets.”

According to Monex; “Our long-term view remains that UK fundamentals are better than markets currently price, now helped by tariff differentials, while the government will ultimately choose not to scrap their fiscal rules with the memory of Liz Truss still fresh in the mind.”

It did, however, add; “For now, though, with sentiment still in the driving seat, sterling looks set to continue trading under pressure.”

There is still an important element of uncertainty surrounding Chinese tariffs ahead of the April 9th scheduled introduction of additional tariffs.

China has not backed away from imposing its own tariffs while Trump has threatened even more aggressive tariffs if China refuses to bend.

In comments on Tuesday, Trump stated that China was desperate for a deal and that they would relent.

According to Scotiabank; “Messaging from the administration on tariff policy remains confusing.”

It added; “Markets may lack enough clarity on tariff policy end goals to form a solid base for now.”

US economic conditions will be a key element in the short term.

The NFIB small business confidence index dipped to a 4-month low of 97.4 for April from 100.7 previously and below consensus forecasts of 98.9.

Significantly, this has pushed the index below the long-term average.

The net percent of owners expecting better business conditions posted a third consecutive monthly decline and the largest monthly dip since December 2020.

According to the NFIB; “This year will be one ruled by uncertainty. Global and domestic actions are generating insecurities in abundance, both political and economic. President Trump’s administration is rearranging the deck chairs at a record pace. Is there an “iceberg” looming ahead or will we sail through to a restructured economy safely?”

The survey was conducted before the tariff increases came into effect and markets will be looking at data compiled after the tariff introduction for insight into the potential impact.

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The (USDCAD) has declined in its recent intraday trading after failing to break the key resistance level at 1.4275, which coincided with testing the resistance of the EMA50. This increased the selling pressure on the price. The decline came as negative signals emerged from the Relative Strength Index (RSI) after it reached excessively overbought levels earlier, supporting the idea of a temporary pullback to gain new momentum.

Despite the current decline, the pair is still moving within an upward corrective wave, enhancing the chances of resuming the upward movement if a key technical condition is achieved, which is breaking the 1.4275 resistance level.

• EUR/USD stays below 1.1000 following Monday’s volatile action.
• The near-term technical outlook points to a lack of bullish momentum.
• Markets will remain focused on tariff headlines in the absence of high-impact data releases.

After rising to 1.1050 on Monday, EUR/USD lost its traction and closed the day slightly above 1.0900. The pair holds its ground early Tuesday and clings to modest daily gains at around 1.0950.

In an interview with Fox News on Monday, Kevin Hassett, Director of the US National Economic Council (NEC), said US President Donald Trump will listen to trading partners if they offer “really great deals.” Later in the day, several news outlets, including Reuters, reported that Hassett told CNBC that Trump is considering a 90-day pause in tariffs for all countries except China. The immediate reaction to this headline boosted the risk mood and helped EUR/USD push higher.

As the White House came out with a statement shortly after, calling the CNBC reporting “fake news,” the risk rally quickly lost its steam and made it difficult for EUR/USD to keep its footing.

Meanwhile, European Union trade commissioner Maros Sefcovic said on Monday that they have offered zero-for-zero tariffs to the US for cars and all industrial goods. “The EU remains open to and strongly prefers talks but we will not wait endlessly,” he noted.

The economic calendar will not offer any high-impact data releases that could influence EUR/USD’s action on Tuesday. Hence, market participants will continue to scrutinize the fresh developments on the global trade conflict.

While it’s difficult to know what will be the next tariff-related headline, the action in Wall Street could provide a directional clue for EUR/USD. A bullish action in US stocks after the opening bell could support the pair and vice versa.

EUR/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart stays near 50, reflecting a lack of bullish momentum.

If EUR/USD fails to stabilize above 1.0950 (static level), 1.0900 (static level, round level) could be seen as the next support before 1.0870 (100-period Simple Moving Average (SMA), 20-day SMA). On the upside, resistances could be seen at 1.1000 (static level, round level), 1.1050 (static level) and 1.1100 (static level).

(This story was corrected on April 8 at 09:12 GMT to mention in the first bullet point that EUR/USD stays below 1.1000, not 1.0000.)

The GBPJPY pair succeeded to face the negative pressures by its rally above the critical support at 187.50, increasing the chances for its stability within the bullish channel’s levels and begin forming bullish waves, noticing its stability near 188.70.

Note that forming more of the bullish attempts is important to surpass the obstacle at 189.60 level, reinforcing the chances for recording extra gains that might extend towards 190.30 and 191.45, while the failure to breach the obstacle will force the price to provide mixed trading, we should confirm that monitoring the price is important in case declining to the critical support, to avoid any losses that might be caused by exiting the bullish track.

The expected trading range for today is between 187.90 and 190.30

Trend forecast: Bullish

Created on April 08, 2025

• The euro initially gapped lower against the Japanese yen during trading on Monday, only to turn around and skyrocket to the upside.
• All things being equal, this is a pair that is going to continue to be very noisy because a lot of traders out there are concerned about the global economy.
• As long as that’s going to be the case, there could still be traders out there looking to buy the Japanese yen for some type of safety, especially now that the Bank of Japan has at least paid some interest into the idea of tightening monetary policy.

Technical Analysis

The technical analysis for this pair is actually fairly neutral, perhaps even starting to show signs of positivity, as the initial gapped lower look terrific, but the market was resilient enough to turn things around. That’s a good sign, and it does suggest that perhaps we are at least going to try to stay in the same range we have been in for a bit of normalcy. If that’s going to be the case, then I think we could go looking to the ¥165 level, but we need a little bit of positivity to make that happen easily.

On the other hand, if we do break down below the ¥160 level, then we will probably start to see the market reach down to the ¥158 level, the region that we had bounce from earlier in the session on Monday. Anything underneath there, then we probably see the euro drop down to the ¥155 level. This is an area that’s been important multiple times, so you need to be cognizant that this could happen, and you also need to recognize that it has been so well supported in the past that might end up being a nice buying opportunity based on value. Regardless, this is a market that I think continues to bounce around quite violently, just like the rest of the financial markets.

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The GBPUSD price declined in its last trading on the intraday trading, to turn its early gains into losses to break the key support level at 1.2865, by the above image, we notice the trading within a bullish correctional price channel’s range, supported by it continues trading above the EMA50, the price last decline is caused by the negative pressure that come from the (RSI).

Created on April 07, 2025

• What happened to the EUR/USD pair’s trading last week confirms that the exchange rate is set for more volatility as investors and markets react to the official implementation of US tariffs and the extent of the expansion of global trade wars.
• According to licensed trading company platforms, the EUR/USD price jumped towards the 1.1145 resistance level, the pair’s highest in six months, before quickly retreating amid profit-taking selloffs, which we often advised acting upon whenever the EUR/USD price moved upwards.
• Consequently, the EUR/USD price retreated towards the 1.0923 support level before closing the week’s trading stable around 1.0962, ahead of the start of the US inflation week’s trading.

Cautious Monitoring of US Inflation Figures Announcement

According to financial market experts’ forecasts, US inflation is expected to provide indications of the repercussions of Trump’s tariffs. American households are likely to see a slight decrease in overall inflation last month, which economists consider a temporary respite following the wave of tariffs imposed by US President Donald Trump. According to economic calendar data, the Bureau of Labor Statistics figures next Thursday are expected to show a slight increase in the US Consumer Price Index (CPI) of 0.1%, the smallest increase since July, based on the average estimates of economists surveyed by Bloomberg.

Meanwhile, the core CPI, a more accurate measure of underlying inflation because it excludes often volatile food and energy costs, is expected to rise 0.3% from February and 3% from a year earlier. This would be the slowest annual pace since 2021.

In general, economists are likely to pay close attention to commodity price inflation in March, as it will help clarify how quickly the higher US tariffs on Chinese goods are reaching American consumers. Trump imposed 10% tariffs on China in February and again last month, in addition to higher tariffs on global steel and aluminium imports, which took effect on March 12. Canada and Mexico have also imposed higher US tariffs on goods not covered by the FTA.

Additionally, there is a risk that goods price inflation will begin to worsen before Trump’s April 2 announcement of comprehensive tariffs, if traders begin to raise prices pre-emptively. During the first two months of the year, the core CPI for goods, excluding food and energy, showed signs of a halt in the years-long deflationary trend.

Trading Tips:

We still recommend selling the euro against the US dollar from every level of appreciation.

Will Europe Retaliate Against the United States?

According to economic experts’ views, the repercussions of Trump’s global tariff war will continue throughout the region, with EU trade ministers scheduled to meet today, Monday. Finance ministers will meet on Friday. For his part, French Finance Minister Eric Lombard, in an interview published on Saturday evening, stated that the EU’s response to US tariffs could include regulating the use of data by major US technology companies.

Eurozone data will focus on the backdrop of the manufacturing sector before the White House launches its fierce attack. German industrial production and trade figures for February will be released on Monday, followed by Italian factory output on Thursday. At the same time, the European Central Bank will enter a media blackout period on Thursday before its decision on April 17, the outcome of which – despite market bets – remains uncertain.

EUR/USD Technical Analysis Today:

According to the daily chart performance above, the EUR/USD pair has an opportunity for an upward rebound if it moves towards and above the psychological resistance of 1.1000, which may trigger technical buying and thus prepare for bullish breakouts that support the upward turn of the Relative Strength Index and the MACD indicator. Technically, this may occur if bulls move the pair towards the resistance levels of 1.1035 and 1.1120, respectively. Conversely, on the same timeframe, the 1.0880 support level will remain a turning point and a threat to the current upward correction. Also, the matter will end with bears moving towards the psychological support level of 1.0800.

The EUR/USD pair may remain in its current range until the reaction to the announcement of US tariffs and this reaction, along with the announcement of US inflation figures and the content of the latest Federal Reserve meeting minutes.

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The GBPJPY pair opened today’s trading negatively, attempting to reach below the main support at 187.50, to hit 186.10, then bounces again to settle above the support again.

Note that the continuation of providing negative momentum by the main indicators will increase the chances for confirming breaking the current support, to reinforce its move to a new negative station, which allows it to target 184.90 level, reaching 50% Fibonacci correction level at 181.80, therefore, we recommend waiting for confirming the break to avoid any losses that might be caused by the price bullish correctional rebound before reaching the extra negative targets.

The expected trading range for today is between 184.90 and 189.80

Trend forecast: bearish by confirming the break

The GBPJPY pair opened today’s trading negatively, attempting to reach below the main support at 187.50, to hit 186.10, then bounces again to settle above the support again.

Note that the continuation of providing negative momentum by the main indicators will increase the chances for confirming breaking the current support, to reinforce its move to a new negative station, which allows it to target 184.90 level, reaching 50% Fibonacci correction level at 181.80, therefore, we recommend waiting for confirming the break to avoid any losses that might be caused by the price bullish correctional rebound before reaching the extra negative targets.

The expected trading range for today is between 184.90 and 189.80

Trend forecast: bearish by confirming the break

Image © Adobe Images

The Pound to Euro rate fell heavily last week but could now see a partial recovery, with technical support levels at 1.1813 and 1.1880 potentially regained, if the risk of a tit-for-tat tariff spat between Washington and Brussels leads EUR/USD to ebb further from its recent highs in the days ahead.

GBP/EUR fell to eight-month lows beneath 1.17 on Friday as the Euro showed greater resilience than Sterling in an escalating global market rout that saw the US dollar come rallying back from the prior day’s losses to the detriment of most other currencies, many of which had rallied sharply on Thursday.

“The sharp spike in the VIX has overshadowed the pound’s larger resilience to tariffs – evidenced in the lower UK tariff – resulting in EURGBP trading much cheaper than rate differentials imply,” says Themistoklis Fiotakis, head of FX research at Barclays.

“We assess this to be a temporary bump and expect the pound to rebound vs. the EUR as equity volatility subsides,” he adds, in a Sunday research briefing.

Above: Pound to Euro rate shown at daily intervals with Fibonacci retracements of August to December uptrend indicating possible areas of technical support for Sterling. Click for closer inspection.

Friday saw Sterling fall up to 1% against a euro that climbed much more sharply against some other currencies including the Australian dollar, which fell more than 4% at its lows. However, the single currency’s gains could reverse somewhat this week if Brussels and Washington engage in a tit-for-tat tariff spat.

The “individualized reciprocal higher tariff,” rate of 20% announced by the White House last week will apply to goods imported from the European Union as of Wednesday and a widely touted retaliation could come as soon as Wednesday, which would risk drawing a counter-response from Washington.

“The European economy is already weak and the tariffs will be another headwind. If Europe retaliates to US tariffs, the negative impacts for Europe will be larger,” says Kristina Clifton, an economist and strategist at Commonwealth Bank of Australia.

“The UK is negotiating with the US to reduce the 10% tariff the US has placed on UK goods imports. If the US agrees to lower their tariff, GBP/USD would jump,” she adds, in a Sunday research briefing.

A counter-response might be likely because President Donald Trump said in last Wednesday’s tariff announcement that retaliation by other countries would merely beget even higher US tariffs, and an escalating tit-for-tat exchange would likely see the effects of the euro’s recent outperformance reverse somewhat.

However, toward the end of the week, on Friday, the release of the UK’s February GDP report might also be impactful for Sterling and could see any recovery of the Pound to Euro rate tempered if it shows the economy stalling afresh as high interest rates and downbeat sentiment weigh ahead of April’s fiscal policy changes.

Above: Quantitative model estimates of possible ranges for the week. Source: Pound Sterling Live.