Created on February 20, 2025

• According to recent trading activity, the GBP/USD exchange rate has stabilized above the 1.26 level, with gains reaching the 1.2637 resistance level, the highest point for the currency pair in two months.
• The pound has remained stable upwards after Britain announced an unexpected rise in inflation from 2.5% in December to 3.0% year-on-year in January, exceeding previous consensus estimates for a rise to 2.8%.
• Consequently, this means that buyers of the US dollar are seeing the best available exchange rate since December 19th.

Factors Contributing to the Pound Sterling’s Gains

According to Forex market trading and through trusted trading company platforms, the pound’s advance comes amid rising inflation in the British services sector to 5.0% in January from 4.4%, raising concerns that high inflation is widespread and will require a more restrictive stance from the Bank of England. The bank is tasked with targeting inflation at 2.0%, and all signs now point to increased price pressures. Furthermore, the typical response would be to tighten policy by keeping prices unchanged or even raising them.

However, the bank expects inflation to rise to 3.7% this year, but believes the rise will be temporary and has indicated that it will continue to cut interest rates.

Nevertheless, the February inflation release appears hotter than the bank expected, suggesting it will have no choice but to halt the easing cycle later in the year. Inflationary pressures are expected to rise in the spring as the government imposes significant new taxes on businesses, which are likely to lead to higher prices. Overall, money markets will price in fewer interest rate cuts, which should support UK bond yields and automatically boost the value of the pound sterling.

GBP/USD futures in forex

The GBP/USD exchange rate rose to a high of 1.2639 in mid-week trading, which represents the strongest level for dollar buyers since December 19, 2024. Although hotter-than-expected inflation data in Britain offers some upside, the bulk of the advance is due to dollar weakness. Commenting on currency market trading, experts at Capital Economics believe: “The US dollar remains in retreat as the ‘Trump trade’ with the dollar recedes.” They added, “Between news about President Trump’s tariff plans, his moves towards apparent rapprochement with Russia, and some weaker US economic data towards the end of the week, the dollar has fallen to its lowest level in two months.”

However, Capital Economics sees limits to US dollar weakness, which could contain GBP/USD’s rally.

He maintains his expectations that the dollar will end the year higher, “because we still believe that US tariffs will end up rising significantly, while the US economy and stock market will resume outperformance.”

Trading Tips:

The British pound is a risk currency that benefits from positive investor sentiment and strong financial markets, so monitor the factors influencing this to anticipate the most appropriate trading opportunities

Technical Analysis for the GBP/USD pair today:

According to recent trading, the GBP/USD pair has now retreated to trade slightly below the 100-hour moving average line. However, the pair made a late recovery to avoid falling into oversold levels for the 14-hour RSI. In the near term, bulls will look to move the currency pair higher at around 1.2635 or higher at the 1.2690 resistance. In contrast, bears will seek to capitalize on renewed selling at around 1.2540 or lower at the 1.2475 support.

In the long term, based on the performance on the daily chart, the GBP/USD pair is trading inside an ascending channel formation. Also, the 14-day RSI supports a long-term bullish bias as it approaches overbought levels. Therefore, bulls will seek to ride the current wave of gains towards the resistance of 1.2825 or higher to the psychological resistance of 1.3000. On the other hand, and on the same time frame, bears will seek to benefit from the renewed selling operations to move the currency pair towards the support levels of 1.2360 and then to the support of 1.2100 respectively.

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• The USD/JPY outlook suggests a scramble for safety in the yen.

• The US president announced a likely 25% tariff on automobiles.

• The FOMC meeting minutes revealed inflation worries due to Trump’s trade policies.

The USD/JPY outlook suggests a scramble for safety in the yen as market participants worry about Trump’s tariffs. At the same time, stalled talks between Russia and Ukraine have lowered the likelihood of a near-term end to the war. 

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The yen soared to new highs on Thursday as traders scrambled for safe assets amid economic and geopolitical uncertainty. The global economy is under threat as Trump marches on with new tariffs. On Tuesday, the US president announced a likely 25% tariff on automobiles that will affect most major economies, especially the Eurozone. These new tariffs follow duties on steel, aluminum, and Chinese goods. At the same time, markets expect a 25% tariff on Mexico and Canada in March. 

The tariffs might ignite a global trade war that would negatively impact the global economy. Consequently, risk appetite will continue dropping, supporting safer currencies like the yen and the US dollar. 

Elsewhere, the FOMC meeting minutes revealed that policymakers were worried Trump’s tariffs would lead to a spike in inflation. Therefore, there is a high chance the Fed will keep interest rates elevated. 

At the same time, tensions between Russia and Ukraine have increased since Trump’s recent involvement. Ukraine is now accusing Russia and the US of secret deals that have caused a pause in planned talks. Continued geopolitical tensions will increase demand for the traditionally safe yen. 

USD/JPY key events today

USD/JPY technical outlook: Price in freefall towards 149.50

On the technical side, the USD/JPY price has collapsed further and broken below the 151.02 support level. This move has pushed the price far below the 30-SMA, indicating a strong bearish lead. At the same time, the RSI has dipped into the oversold region, indicating solid bearish momentum. 

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Bears took charge when the price met its resistance trendline. The reversal was sharp, pushing the price below the 30-SMA. Moreover, bears confirmed a continuation of the downtrend when the price broke below 151.01 to make a lower low. 

Given the strong bearish bias, USD/JPY might soon reach the 149.50 level. However, since the RSI is in the oversold region, the price might soon pause before continuing lower.

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• EUR/USD enters a consolidation phase following a three-day decline.
• Sellers could remain interested in case EUR/USD fails to reclaim 1.0440.
• The US economic calendar will feature weekly Initial Jobless Claims data.

EUR/USD moves sideways below 1.0450 after closing the previous three days in negative territory. In the absence of high-tier data releases, the risk mood could influence the pair’s action in the second half of the day.

The minutes of the Federal Reserve’s (Fed) January policy meeting showed late Wednesday that some policymakers cited potential changes in trade and immigration policy as having potential to hinder the disinflation process. Although investors largely ignored this publication, the cautious market stance helped the US Dollar (USD) hold its ground and didn’t allow EUR/USD to stage a rebound.

Later in the day, the US Department of Labor will publish the weekly Initial Jobless Claims data. Markets expect the number of first-time applications for unemployment benefits to rise to 215,000 in the week ending February 15 from 213,000 in the previous week. A reading at or below 200,000 could support the USD with the immediate reaction and cause EUR/USD to stretch lower. On the other hand, a print above 230,000 could have the opposite impact on the pair’s action.

Meanwhile, US stock index futures were last seen losing between 0.2% and 0.3%. A bearish opening in Wall Street, followed by a sharp decline in main equity indexes, could allow the USD to benefit from safe-haven flows and open the door for an extended slide in EUR/USD.

EUR/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart stays below 50, highlighting a lack of buyer interest. 

On the downside, 1.0390-1.0400 (100-period Simple Moving Average (SMA), 50-day SMA, Fibonacci 50% retracement of the latest downtrend) aligns as the first support area before 1.0370 (200-period SMA) and 1.0350 (Fibonacci 38.2% retracement).

In case EUR/USD climbs above 1.0440 (Fibonacci 61.8% retracement) and confirms this level as support, technical sellers could be discouraged. Above this resistance, 1.0500-1.0510 (round level, Fibonacci 78.6% retracement) and 1.0550 (static level) could be seen as next hurdles.

Copper price continued to provide negative pressures on 4.5300$ support line, affected by stochastic continuous negativity, to confirm postponing the bullish attempts, while we recommend to wait to break the current support to start targeting the correctional stations near 4.4600$ and 4.3900$.

On the other hand, failing to break will force the price to provide mixed sideways trades due to the continuous contradiction between the major indicators, in addition to 4.6800$ level that forms solid barrier against the attempts to regain the bullish bias.

The expected trading range for today is between 4.4600$ and 4.6200$

Trend forecast: Bearish

Copper price continued to provide negative pressures on 4.5300$ support line, affected by stochastic continuous negativity, to confirm postponing the bullish attempts, while we recommend to wait to break the current support to start targeting the correctional stations near 4.4600$ and 4.3900$.

On the other hand, failing to break will force the price to provide mixed sideways trades due to the continuous contradiction between the major indicators, in addition to 4.6800$ level that forms solid barrier against the attempts to regain the bullish bias.

The expected trading range for today is between 4.4600$ and 4.6200$

Trend forecast: Bearish

Delta Airlines’ stock price (DAL) fell in the intraday levels while trying to gather positive momentum to rise anew, as it leaned on the support of the 50-day SMA, amid the dominance of the main upward trend while the stock trades alongside the secondary short-term trend line, as a positive divergence forms in the RSI after reaching oversold levels compared to the stock’s movements, sending out positive signals. 

Therefore we expect the stock to return higher and target the pivotal resistance of $69.98, provided the support of $60.40 holds on.

Trend forecast for today: Likely Bullish

Delta Airlines’ stock price (DAL) fell in the intraday levels while trying to gather positive momentum to rise anew, as it leaned on the support of the 50-day SMA, amid the dominance of the main upward trend while the stock trades alongside the secondary short-term trend line, as a positive divergence forms in the RSI after reaching oversold levels compared to the stock’s movements, sending out positive signals. 

Therefore we expect the stock to return higher and target the pivotal resistance of $69.98, provided the support of $60.40 holds on.

Trend forecast for today: Likely Bullish

Created on February 20, 2025

• During the early hours on Wednesday, we saw the British Pound rally a bit against the US Dollar, but it has since rolled over to show signs of hesitation.
• I’ve been waiting to see whether or not the sellers would come back in, because despite the fact that the British Pound is doing much better than most other currencies, the question then becomes whether or not it can actually overtake the dollar.
• With the Federal Reserve out there and showing no signs of slowing down its restrictive monetary policy, it’s difficult to imagine a scenario where the US dollar gives up too much strength in the near term.

Central Banks

The Bank of England has started cutting rates already, so it’s a little bit of a confusing move until you look at the overall length of the trend and the fact that we got a little over extended and then realize that this bounce was probably needed.

Ultimately, this is a market that is currently stuck between the 50 day EMA and the 200 day EMA, which of course is an area where you see a lot of volatility and noisy trading in at times. If we were to drop from here and break down below the 1.25 level, we would not only be breaking down below a significant large round number, but also below the crucial 50 day EMA.

In that environment, I expect the British pound to not only drop to the 1.2350 level, but perhaps even the 1.21 level where we had bounced from. Alternatively, if we turn around and break above the 200 day EMA at the 1.27 region, then we test the 1.2750 level. Once we get beyond that, then I think the trend has completely changed. Right now, though, it looks like a bit of profit taking is going on and there is a lack of upward momentum.

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Created on February 20, 2025

• The US dollar has drifted a little bit lower during the trading session on Wednesday as we continue to see a lot of noisy behavior.
• It’s worth noting that the 200 Day EMA has offered resistance, and now it looks like we are going to continue to see this area as being important.
• The pullback in the USD/JPY pair goes right along with the last couple of weeks, as the Bank of Japan is more worried about inflation than they had been previously.

Technical Analysis

I believe that the technical analysis for this market is likely to continue to show signs of hesitation for momentum to the upside, but I don’t necessarily think it’s ready to break down significantly from here. The ¥150 level underneath is a major support level, and as long as we can stay above there, then I think you have a reasonable chance for the US dollar to pick up momentum, as the interest rate differential between the 2 currencies is fairly wide. Even if the Bank of Japan were to raise rates by 25 basis points, the reality is that you still get paid to hang on to this pair, and it is probably only a matter of time before the market starts focusing on that again.

Nonetheless, this is a market that hasn’t shown itself to be reliably bullish yet, and I need we need to get the market to close above the ¥152.50 level, and therefore if we take off above there, then the market could go looking to the 50 Day EMA, and then perhaps the ¥155 level after that. Anything above there would have the Japanese yen being eviscerated by the US dollar.

Ultimately, this is a market that I think continues to be very noisy, and choppy to say the least. However, I will keep an eye on that ¥150 level, as it is a large, round, psychologically significant figure, and an area that’s been both support and resistance, so therefore I think you’ve got a situation where noise and back and forth continues to be the case.

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• GBP/USD trades near 1.2600 in the European session on Wednesday.
• Annual CPI inflation in the UK climbed to 3% in January. 
• The pair’s technical outlook points to a loss of bullish momentum.

GBP/USD struggles to hold its ground and trades marginally lower on the day at around 1.2600 in the European session on Wednesday. The pair’s technical outlook highlights a loss of bullish momentum.

The data published by the UK’s Office for National Statistics (ONS) showed on Wednesday that annual inflation in the UK, as measured by the change in the Consumer Price Index (CPI), climbed to 3% in January from 2.5% in December. This reading came in above the market expectation of 2.8%. Other details of the report showed that the Services CPI declined by 0.2% on a monthly basis, not allowing Pound Sterling to benefit from the stronger-than-forecast headline CPI reading.

In the second half of the day, the Federal Reserve (Fed) will release the minutes of the January policy meeting.

In case the publication shows that policymakers are willing to wait until the second half of the year before considering another rate cut, the immediate reaction could support the USD. On the other hand, investors could ignore this document if it just repeats that policymakers agree on the need for a cautious approach to policy easing. According to the CME FedWatch Tool, markets nearly fully price in a policy hold in March.

Meanwhile, investors will continue to pay close attention to risk perception. At the time of press, US stock index futures were trading flat. In case markets turn cautious with Wall Street opening on a bearish note, GBP/USD could continue to stretch lower.

GBP/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart declines toward 50, reflecting a loss of bullish momentum. On the downside, 1.2530 (Fibonacci 61.8% retracement level of the latest downtrend) aligns as first resistance before 1.2500 (round level, static level) and 1.2470 (100-period Simple Moving Average).

Looking north, first resistance could be spotted at 1.2650 (Fibonacci 78.6% retracement) before 1.2700-1.2710 (round level, static level).