– Written by


Ben Hughes

STORY LINK GBP/USD Forecast: Pound Sterling Dips as Trump Comments Slow Dollar Slide

The Pound to US Dollar exchange rate (GBP/USD) edged lower during Wednesday’s European session, easing after briefly touching its strongest levels in nearly four years.

At the time of writing, GBP/USD was trading close to $1.3786, down roughly 0.4% from the start of the day’s trade.

After tumbling to fresh multi-year lows late on Tuesday, the US Dollar (USD) found some footing on Wednesday, recovering a fraction of its recent losses.

The greenback has faced sustained selling pressure over the past ten days, shedding around 3% since mid-January. Confidence in the currency has been undermined by ongoing uncertainty surrounding US trade, foreign and economic policy.

Losses deepened overnight after President Donald Trump appeared to welcome the Dollar’s decline, describing the move as ‘great’ and suggesting the currency should be allowed to ‘find its own level’.

By Wednesday morning, however, some USD investors began to reassess positions as attention shifted to the Federal Reserve’s upcoming interest rate decision.

While no change in policy is expected from the Fed at its first meeting of the year, the prospect of firmer guidance was enough to lend the Dollar some modest support.

The Pound (GBP) struggled to hold its ground against most major counterparts on Wednesday.

With no significant UK economic releases on the calendar, Sterling found itself short of fresh drivers, leaving it vulnerable to shifts in broader market sentiment.

Adding to the pressure, expectations for Bank of England (BoE) interest rates were nudged slightly lower, despite a run of stronger-than-forecast UK data releases last week.

GBP/USD Forecast: Political Deadlock to Weigh on the Dollar?

As the week progresses, the Pound to US Dollar exchange rate could regain upward momentum if political risks in Washington intensify.

Ongoing disputes between Senate Democrats and Republicans over Department of Homeland Security funding mean a partial government shutdown appears increasingly likely when current funding expires on Saturday. Such concerns are continuing to inflate the US Dollar’s risk premium.

Meanwhile, with the UK data calendar remaining thin, movements in Sterling are likely to stay closely tied to wider global market dynamics.

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Created on January 28, 2026

The Euro has finally made a decision to break out. However, the one problem is that it did it the day before a FOMC press conference. Still a bullish look though.

EUR/USD

The Euro has actually done something for once. This is a pair that as an analyst it is very painful to cover at times because it has a history of doing a lot of nothing, jumping for a few weeks, and then doing more nothing. That being said, we have broken above an area on the EUR/USD currency pair that I have had circled since about September 17. This was when Jerome Powell’s press conference really rattled the market. Well, we are above there now, which is a very good sign for the Euro.

When you take the technical analysis from the consolidation area, it is 450 pips, give or take a few. That suggests that we could go to the 1.23 level. So I look at this and I realize that it is an area that has mattered more than once. This is an area that has been a significant top multiple times going back about a decade, and then you can see that there is action all the way back to 2015, and even 2012 and 2010. In other words, it is an area that the market likes.

The FOMC Factor

I think that might be where we head because technical analysis suggests that, momentum suggests that, but I don’t think we have all clear quite yet. Quite frankly, we have a press conference after the FOMC decision on Wednesday and Jerome Powell could really throw a monkey wrench into this not even meaning to. If he starts talking about sticky inflation, that has people pushing back the time frame of Federal Reserve cuts even further.

So, we will have to see how that plays out. I think a pullback towards the 1.18 level or maybe 1.1850 offers a bit of an opportunity, but you have to see the bounce first. Again, it wouldn’t surprise me for this pair to go to 1.23. We have probably seen it 10 to 12 times in my career, so it is a familiar level.

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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.

Created on January 28, 2026

The British pound has been somewhat noisy against the Japanese yen during trading on Tuesday, but that will have been expected as the Bank of Japan and others have intervened.

GBP/JPY

The British pound has been somewhat noisy against the Japanese yen during trading on Tuesday, but that will have been expected as we’ve recently seen some form of intervention to favor the Japanese yen in order to combat some of the massive selling pressure that has been a mainstay here.

That being said, the British pound does look like it is fairly well supported at the 210 yen level, and not only is it seeing a bit of structural support as this was an area that was supported previously, we also have the 50-day EMA ranked there as well, which of course offers a significant amount of support.

Technical Support and Market Outlook

If we were to break down below the 50-day EMA, the 205 yen level could be the target, possibly even the 200-day EMA, which is currently trading at the 202.45 level and rising.

All things being equal, this is a market that I think remains very bullish, and of course you do get paid at the end of every day to hang onto it, so I’m still bullish on this pair. I also recognize that we need some of the noise to soften in the yen denominated markets overall in order to get large with the position.

The US dollar is struggling quite a bit more against the yen than the British pound, but that makes sense considering the US dollar has its own concerns. That is why I’m focusing on this pair, because I’m trying to match up strength with inherent weakness. Yes, the central banks may have done something, but that’s not the sign of a strong currency; quite frankly, it’s mainly the opposite that it gives an impression of. All things being equal, this is a pair that I think will try to get to the 215 yen level eventually.

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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 GBPJPY pair kept its stability since yesterday’s trading above 210.40 level, increasing the chances of gathering the required bullish momentum to motivate the suggested bullish trend, reminding you that the initial positive target is located near 211.70 level, and surpassing the moving average 55 will reinforce the chances of recording extra gains by its rally towards 212.15, to press on the previously broken bullish channel’s support that appears in the above image.

Facing new bearish pressure and reaching below the previously mentioned support will confirm its surrender to the bearish corrective bias dominance, which forces it to suffer extra losses by reaching 209,60 followed by 209.00.

The expected trading range for today is between 210.65 and 212.15

Trend forecast: Bullish

• The GBP/USD forecast points to further gains to 1.4000 provided the Fed shows a dovish stance in today’s meeting.
• Sterling remains at an advantage against the dollar amid recent upbeat UK data, pushing the BoE to rethink its aggressive easing policy.
• Technically, the price remains in a strong uptrend with a risk of profit-taking before further upside.

The British pound approached 1.3800 on Wednesday as the US dollar encountered selling pressure ahead of the Fed’s first policy decision of 2026. The Fed is anticipated to keep interest rates at 3.50%-3.75%. However, political tensions over the central bank’s independence are weighing on the dollar. As rumors of administrative pressure on Chair Powell increase concerns about future US monetary policy, investors are pricing in a “governance premium”.

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Sterling has a clear runway due to dollar weakness and solid domestic data. December retail sales rose 0.4%, easing recession fears and suggesting that UK consumers are coping with high borrowing prices better than expected. These numbers have prompted the Bank of England to rethink its aggressive easing cycle, which runs counter to the Fed’s policy.

The pair’s momentum is boosted by global macro trends that favor commodities and high-beta currencies over the dollar. Gold prices have reached record highs, and new US tariff threats are disrupting global trade, making the pound a significant beneficiary of capital rotation out of dollar-denominated assets. UK inflation remains at 2.1%, supporting the Bank of England’s cautious stance and the pound’s yield advantage.

Markets are increasingly focused on the FOMC press conference in the late New York session. Any evidence that the Fed caves to political pressure to cut rates might break the 1.4000 resistance level. On the other hand, if Powell remains data-dependent and hawkish, traders may cover short dollar positions, reversing the sterling rally.

GBP/USD Technical Forecast: Buyers Aiming for 1.4000

The GBP/USD price broke above the 1.3800 level, marking a fresh 4-year top at 1.3860 before correcting down to the 1.3790 area. The broken supply zone around 1.3800 is now acting as support, with projections pointing to a test of the swing high at 1.3860, then 1.3900, and finally the psychological level at 1.4000.

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However, the RSI remains extremely overbought, which could trigger a correction to test the 20-period MA at 1.3700, ahead of 1.3600. Only a sustained weakness below the 20-period MA could trigger a trend reversal.

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Positioning and Risk Outlook

In my view, warnings of yen intervention, a hawkish BoJ policy stance, and expectations of Fed rate cuts support a negative price trajectory. However, Japan’s upcoming election, US economic indicators, and Fed Chair Powell’s speech will be key, given recent price action.

Furthermore, a higher BoJ neutral interest rate level (potentially 1.5%-2.5%) would signal a narrower US-Japan interest rate differential. A sharply narrower rate differential may trigger a yen carry unwind, as seen in mid-2024. An unwind of yen carry trades would likely send USD/JPY toward 140 over the longer term.

However, upside risks to the bearish outlook include:

• Dovish BoJ rhetoric and a lower neutral interest rate (potentially 1% – 1.25%).
• Fed Chair Powell downplays the chances of an H1 2026 cut.
• Robust US economic data dampens bets on an H1 2026 Fed rate cut.

These factors would send USD/JPY higher. However, ongoing warnings of yen intervention are likely to cap the upside at the 155 level.

Read the full USD/JPY forecast, including chart setups and trade ideas.

Conclusion: Politics, the BoJ, and the Fed in the Spotlight

In summary, the USD/JPY trends will hinge on Japan’s election result, Prime Minister Takaichi’s fiscal spending plans, the BoJ’s policy stance, the Fed’s rate path, and Trump’s tariff policies.

A higher BoJ neutral rate (1.5%-2.5%) would signal a hawkish BoJ rate path, strengthening the yen. Meanwhile, Prime Minister Takaichi’s snap election will also be crucial for the near-term USD/JPY trends, given her fiscal policy goals. Additionally, dovish Fed rhetoric would suggest narrower rate differentials, reaffirming the bearish medium-term outlook for USD/JPY.

A stronger yen and the unwinding of yen carry trades would likely push USD/JPY toward 140 over the longer 6-12 month timeline.

For more in-depth analysis, review today’s USD/JPY trading setups in our latest reports and consult the economic calendar.

– Written by


Frank Davies

STORY LINK GBP/USD Forecast: Pound Sterling Edges Higher as USD Headwinds Mount

The Pound to US Dollar exchange rate (GBP/USD) hovered near a four-month peak on Tuesday, supported by ongoing weakness in the US Dollar, although a lack of fresh data kept volatility contained.

At the time of writing, GBP/USD was trading at $1.3701, moving sideways just shy of the previous session’s four-month high.

The US Dollar (USD) remained under pressure, extending recent losses after a heavy selloff earlier in the week dragged the currency to multi-month lows.

Sentiment towards the Greenback has deteriorated amid growing unease over both foreign policy and domestic political strains. While President Donald Trump stepped back from threatening new tariffs on Europe, markets were unsettled by fresh warnings aimed at Canada, with Trump suggesting 100% tariffs could be imposed if Ottawa pursues a trade agreement with China.

At home, the mood darkened further following public outrage over the second fatal shooting of a US citizen by immigration agents in Minneapolis. The incident reignited fears of political gridlock, with some Democrats withdrawing support for funding the Department of Homeland Security, raising the prospect of another government shutdown.

With tensions simmering on multiple fronts, investors have grown increasingly cautious about holding US Dollar exposure. Although USD briefly stabilised after Trump attempted to cool the situation in Minneapolis, the currency struggled to attract sustained buying interest.

The Pound (GBP), meanwhile, found it difficult to extend gains, with a quiet UK data calendar leaving Sterling short of clear direction.

Political developments also weighed on sentiment. Reports of renewed friction within the governing Labour Party surfaced after allies of Prime Minister Keir Starmer moved to block Andy Burnham from standing in a forthcoming by-election. The move fuelled speculation it was designed to head off a potential leadership challenge, adding another layer of uncertainty that appeared to cap demand for the Pound.

GBP/USD Forecast: Fed Leadership Decision Looms

Looking ahead, markets are bracing for an announcement from President Donald Trump on his preferred candidate to succeed Jerome Powell as Chair of the Federal Reserve, with the nomination expected before the end of the month.

Given Trump’s repeated criticism of Powell’s policy stance, investors anticipate a more dovish nominee when Powell’s term expires in May. Such an outcome could undermine confidence in the US Dollar and place USD under renewed pressure.

With little in the way of UK economic data scheduled, movement in the Pound is likely to remain closely tied to shifts in global risk appetite and developments surrounding US monetary policy.

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– Written by


David Woodsmith

STORY LINK Pound to Dollar Forecast 2026: Gold and Yen Surge Expose USD Vulnerability

The Pound to Dollar exchange rate (GBP/USD) surged to fresh four-month highs above 1.3680 as the dollar slid sharply on yen intervention fears and another surge in gold prices, pushing the DXY index into a technically fragile zone.

GBP/USD Forecasts: Fresh 4-Month Best

The dollar posted sharp losses in New York trading on Friday and has lost further ground on Monday.

The Pound to Dollar (GBP/USD) exchange rate surged to a 4-month high just above 1.3680 before a slight correction

UoB commented; “We continue to expect a stronger GBP today, but given the deeply overbought conditions, any advance is likely part of a higher range of 1.3590/1.3700. In other words, GBP is unlikely to break clearly above 1.3700.

The bank notes that levels above 1.3700 are the September 2025 high of 1.3730 and the July 2025 peak at 1.3790.

There are no major UK data releases this week with global developments set to dominate GBP/USD moves.

The dollar slide was triggered to an important extent by a slump against the yen amid fears that central bank intervention to buy the yen was imminent. Overall dollar sentiment also remained negative while there was another surge in precious metals with silver and gold both jumping to fresh record highs.

MUFG commented; “The broad US dollar index (DXY) remains under downward pressure, having slipped below the 98.00 handle. The index now sits at a technically pivotal zone – any further deterioration risks opening the door to an extended phase of USD softness.”

Overnight, the Bank of Japan and Federal Reserve looked to check dollar positions against the yen. This is the final move before a potential move to actually intervene and buy the yen.

ING commented; “Suspected intervention to sell USD/JPY, plus US authorities reportedly getting involved, has prompted a near 3.5% drop since Friday morning. This is not a fundamentally driven dollar move, but the dollar risk premium can stay elevated.”

ING is not convinced that the dollar slide will continue; “away from the geopolitical risk premium being attached to US assets, the dollar’s fundamental story has not deteriorated. Plus, we suspect this week’s FOMC meeting could prove slightly dollar bullish.

It added; “for the dollar sell-off to continue like this, we will probably need to see some poor domestic US news. Away from the FOMC, this will heighten scrutiny on earnings releases from US Big Tech this Wednesday and Thursday.

The Fed will announce its interest rate decision on Wednesday with strong expectations that rates will be held at 3.75%.

Danske Bank commented; “We expect the Federal Reserve to maintain its monetary policy unchanged, in line with broad consensus and market pricing. The Fed will not publish updated projections, so the focus is strictly on Powell’s remarks.”

From a longer-term view it added; “We maintain our forecast for two more Fed cuts, in March and June, slightly ahead of market pricing.”

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USD/JPY Inches Higher as Yen Strengthening Lacks Follow-Through, Fed 2-Day Meeting Begins

is edging higher on Tuesday with the yen weakening amid concerns about Japan’s fiscal health on the back of Prime Minister Takaichi’s plans for aggressive spending and tax cuts. Furthermore, the market mood is more positive, which is also undermining safe-haven demand for the JPY.

Yesterday’s strengthening of the yen is lacking follow-through for now. However, the downside in the yen could be limited given the willingness of US and Japanese authorities to step in and support the currency and the BoJ’s hawkish stance.

The sharp move in USD/JPY in recent sessions highlights market nervousness over a possible intervention.

PM Takaichi has called a snap election for February 8, aiming to capitalise on her popularity to strengthen her mandate and push ahead with fiscal expansionary policies. Japanese bond yields have soared in recent weeks amid nervousness over Japan’s fiscal outlook. That same nervousness had weighed on the yen.

data is due late in the week. The BoJ lifted its growth and inflation forecasts in last week’s meeting, keeping more rate hikes on the table.

This is in contrast to the Federal Reserve, which kicks off its two-day meeting today. The Fed is expected to leave rates unchanged at 3.5% to 3.75% after three consecutive last year. Attention will be on Fed Chair Powell’s press conference for further clues on the timing of further rate cuts.

The has steadied around a 4-month low, weighed down in recent sessions by the “sell America” trade, by Trump’s threats of 100% tariffs on Canada and higher tariffs on South Korea, by fears of another US government shutdown, and by speculation of JPY intervention.

USD/JPY Forecast – Technical Analysis

USD/JPY broke aggressively below its rising trendline dating back to mid-September, and the 50 SMA, falling to a low of 153, before settling above the 154.25 support.

USD/JPY bulls are extending the recovery today towards 155.00. A rise above the 155 puts the pair on a more stable footing and brings 156.00 back into focus ahead of 157.50 as the next key resistance area to watch; this had acted as a support before the sharp selloff.

On the downside, there isn’t that much in the way of support. Should sellers take out the 153.30 low, this exposes the longer-term trendline support around 152.00. A break below here exposes the 200 SMA at 149.75.

DAX Rises as EU-India Trade Deal Is Agreed

, along with European shares, is seen opening broadly higher on Tuesday, with trade tensions, the upcoming Fed rate decision, and mega cap tech earnings all in focus.

The EU and India have concluded a free trade agreement after almost 20 years of negotiations, and space science seeks to deepen economic ties and offset the impact of Trump’s tariff policies.

The deal is expected to double EU goods exports to India by 2032, eliminating or reducing tariffs on almost 97% of those exports. This includes a range of products from automobiles and industrial goods to wine and chocolate. India has agreed to allow up to 250,000 European-made vehicles into the country at preferential duty rates.

Meanwhile, the EU will eliminate or reduce tariffs on almost 100% of goods imported from India over the coming seven years. The deal is set to give India a competitive edge in exporting labour-intensive goods, which have been hit hard by Trump’s steep tariffs.

Looking ahead, today also sees the start of the FOMC meeting ahead of tomorrow’s rate decision, where investors will be looking for clues on the timing of the Fed’s next rate cut. President Trump is expected to nominate a new Federal Reserve chair within the coming days.

In the US, 100 companies are due to release their quarterly earnings results this week. Among these firms, , , and will unveil their latest results.

DAX Forecast – Technical Analysis

 After running into resistance at 25,500, the record high, the DAX fell lower, breaking below its near-term rising trendline dating back to mid-November before finding support at 24,350 and settling above the 24,600 support. From here, the price has extended its recovery, and while remaining below the rising trendline, it is tracking the line higher. The long-term uptrend also remains intact.

Buyers, supported by momentum, will look to extend the recovery above 25,500 to fresh record highs.

Immediate support is seen at 24,600, the July and October highs. A close below here opens the door to the 50 SMA at. 24,330.

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