February 3, 2025 – Written by David Woodsmith

STORY LINK GBP/USD Alert: Pound Rallies vs Dollar as Mexico Secures 1-Montb Tariff Delay

BREAKING: The Pound to Dollar exchange rate (GBP) jumped to 1.2420 from around 1.2330 at the US open. Risk appetite recovered strongly after Monday’s opening following reports that President Trump’s 25% tariffs on Mexico had been delayed by 1 month.

The dollar also pared gains against European currencies amid hopes that bilateral negotiations could lead to further concessions.

The Pound to Euro (GBP/EUR) exchange rate held firm around 1.2030.

The move followed a conference call between Trump and Mexican President Sheinbaum.

Volatility will inevitably remain high with risk vulnerable again if Canada adopts a hardline stance and fails to secure a reprieve.

According to sources, Mexico wanted the tariffs dropped entirely, but Trump would only agree on a 1-month postponement.

Inevitably, the US Administration will look to force more concessions from Mexico.

The immediate relief sparked hopes for a delay to tariffs on Canada and helped trigger a rebound in risk appetite, with equities paring losses.

The Canadian dollar rebounded strongly with USD/CAD at 1.4575 from 21-year highs near 1.4800.

Scotiabank commented, “The weekend advance has left a gap on the intraday chart between 1.4550/00, which markets may have to try and fill before the USD’s broader advance resumes.”

The Euro also rallied, although the threat of tariffs will loom large as a negotiating tactic.

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TAGS: Pound Dollar Forecasts

February 3, 2025 – Written by David Woodsmith

STORY LINK GBP/USD Alert: Pound Rallies vs Dollar as Mexico Secures 1-Montb Tariff Delay

BREAKING: The Pound to Dollar exchange rate (GBP) jumped to 1.2420 from around 1.2330 at the US open. Risk appetite recovered strongly after Monday’s opening following reports that President Trump’s 25% tariffs on Mexico had been delayed by 1 month.

The dollar also pared gains against European currencies amid hopes that bilateral negotiations could lead to further concessions.

The Pound to Euro (GBP/EUR) exchange rate held firm around 1.2030.

The move followed a conference call between Trump and Mexican President Sheinbaum.

Volatility will inevitably remain high with risk vulnerable again if Canada adopts a hardline stance and fails to secure a reprieve.

According to sources, Mexico wanted the tariffs dropped entirely, but Trump would only agree on a 1-month postponement.

Inevitably, the US Administration will look to force more concessions from Mexico.

The immediate relief sparked hopes for a delay to tariffs on Canada and helped trigger a rebound in risk appetite, with equities paring losses.

The Canadian dollar rebounded strongly with USD/CAD at 1.4575 from 21-year highs near 1.4800.

Scotiabank commented, “The weekend advance has left a gap on the intraday chart between 1.4550/00, which markets may have to try and fill before the USD’s broader advance resumes.”

The Euro also rallied, although the threat of tariffs will loom large as a negotiating tactic.

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TAGS: Pound Dollar Forecasts

Created on February 03, 2025

• Recent gains by the Japanese yen have led to the week and month ending with gains, amid growing expectations that the Bank of Japan will continue to raise interest rates this year.
• The selling operations of the USD/JPY pair pushed it towards the support level of 153.80 before closing the week’s trading stable around the level of 155.18, as the US dollar gained positive momentum in the forex markets at the end of trading amid Trump’s official approval of customs tariffs on goods imported from China, Canada and Mexico.

Japanese Yen Performance Anticipates BoJ Policies

According to the forex market trading, the Japanese yen was in a good position against the rest of the other major currencies amid strong signals of the future tightening of the Japanese central bank’s policies. In this regard, Deputy Governor of the Bank of Japan Ryozo Himino stated that the Japanese central bank plans to continue raising rates if the economy and inflation are in line with expectations. On the economic front, data released at the end of the week showed that core inflation in Tokyo accelerated to an 11-month high of 2.5% in January, reinforcing expectations for hawkish policy from the Bank of Japan.

In addition, Japanese retail sales exceeded expectations, industrial production rebounded, and the country’s unemployment rate fell unexpectedly.

Trading Tips:

Keep in mind that currency investors are waiting for new buying opportunities for the dollar against the Japanese yen, so be a good follower of the events of this important week

And this week, investors will closely analyse the summary of opinions from the last Bank of Japan meeting for insights into potential policy tightening this year.

US Dollar Will Be Affected by Trump’s Conflict with Powell

After the US central bank kept interest rates unchanged. Amid expectations of a future dispute between Trump and Jerome Powell. In a decisive post on the Truth Social website, Trump attacked the Federal Reserve after the meeting. “Because Jay Powell and the Fed have failed to stop the problem they created with inflation, I will do so by unleashing American energy production, cutting regulation, rebalancing international trade, and re-igniting American manufacturing,” Trump wrote.

Meanwhile, it’s worth noting that Trump is not necessarily calling for lower interest rates and is proposing his own solutions independently of the Fed. This is a different approach from his first term and may be related to the recognition that inflation remains a risk. Other criticisms have been directed at the Fed. Trump continued by saying that “if the Fed had spent less time on diversity, equity, inclusion, gender ideology, ‘green’ energy, and fake climate change, inflation would never have been a problem.”

Overall, Trump has probably had more influence on these issues than on actual policy. While Powell claimed he had “not been in touch” with Trump, some reporters at the press conference asked him about some of the recent changes. As the BBC noted, “…the questions Powell faced about how the Fed would handle a new White House order to scrap its diversification programs – and why it had pulled out of a global group of central banks focused on the risks of climate change to the financial system – underscored the challenges he will face in keeping the bank above the political fray.”

USD/JPY Technical Analysis and Expectations Today:

According to the performance on the daily chart, as is clear the USD/JPY pair is in an uptrend breakout mode. Therefore, forex investors may be looking for new opportunities to buy the USD/JPY. Technically, we see that the most appropriate levels for buying the USD/JPY currently are around the support levels of 153.30 and 151.90 respectively. Furthermore, as we always recommend not taking risks, no matter how strong the trading opportunities are. On the other hand, and over the same period of time, the resistance of 156.70 will remain the most important for bulls to control, and thus prepare for the psychological resistance of 160.00 again.

Want to trade our USD/JPY forex analysis and predictions? Here’s a list of forex brokers in Japan to check out.

Created on February 03, 2025

• As you can see, the British pound has been rather bullish against the Japanese yen during the trading session on Friday as we headed into the weekend on a positive note.
• At this point in time, I suspect you have a scenario where a lot of traders are trying swap at the end of the day.
• The 200-day EMA sits just above and is offering significant resistance, and I think that is something worth paying close attention to.

Ultimately, at this point in time, you have to be very cognizant of the fact that we have recently tested a major support level, and it now looks very much like a market that is trying to determine whether or not we can continue to climb. I think that’s probably the case given enough time, but I also recognize that there is a lot of technical resistance just above. Not only at the 200 day EMA, but also the 50 day EMA and then the 195 yen level. In general, I like this pair. I just don’t necessarily want to get overly exposed at this point.

Risk Appetite

This is very sensitive to risk appetite, and therefore I think you have to be very cautious because as we’ve seen on Friday, Donald Trump is willing to play games in the media, and that has the computers trading back and forth in a wild fashion. So, with all of that being said, I think you’ve got a scenario where a lot of traders are going to be looking at this basically as the carry trade and hoping for a lot of sideways action. The 190 yen level underneath is the bottom, and the 200 yen level above is the top. Right now, we’re closer to the bottom, so I’m more inclined to be a buyer, but again, not in huge, massive positions.

Begin trading our daily forecasts and analysis. Here is a list of Forex brokers in Japan to work with.

• GBP/USD starts the week under strong selling pressure on Trump tariff news.
• The US Dollar benefits from the risk-averse market atmosphere. 
• The pair turns technically bearish despite the latest recovery attempt.

GBP/USD declined sharply at the weekly opening and touched its lowest level in two weeks near 1.2250. Although the pair corrects higher and trades above 1.2300 in the European session, it could have a difficult time gathering recovery momentum, with safe-haven flows dominating the action in financial markets.

Over the weekend, US President Donald Trump delivered on his tariff threats, announcing that they will impose sweeping 25% tariffs on Mexican and Canadian imports and 10% on Chinese goods entering the US. Additionally, Trump told reporters that he would “definitely” impose tariffs on European imports but didn’t provide any additional details.

Reflecting the negative impact of this development on risk mood, the UK’s FTSE 100 Index is down more than 1%. Furthermore, US stock index futures were last seen losing between 1.3% and 1.9%.

In the second half of the day, the ISM Manufacturing PMI data for January will be featured in the US economic calendar. Unless there is a significant divergence between the market expectation and the data, investors are likely to remain focused on risk perception. A bearish opening in Wall Street, followed by an extended selloff in major equity indexes could boost the USD and force GBP/USD to continue to push lower.

GBP/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart stays below 40, suggesting that the bearish bias stays intact. The pair was last seen trading near 1.2310, where the 100-period Simple Moving Average (SMA) and the ascending trend line align. In case GBP/USD fails to clear this hurdle, technical sellers could retain control. In this scenario, 1.2260-1.2250 (Fibonacci 23.6% retracement of the latest downtrend, daily low) could be seen as next support before 1.2160 (static level) and 1.2100 (static level, end-point of the downtrend).

On the upside, 1.2370 (Fibonacci 38.2% retracement), 1.2400 (200-period SMA) and 1.2450 (Fibonacci 50% retracement) could be seen as next resistance levels.

The USDJPY price found solid support at 153.75 and couldn’t manage to break it, to rebound upwards clearly and surpass 154.96 level, noticing that the price begins today with more rise to attempt to return to the main bullish channel, which pushes the price to achieve more gains in the upcoming period, targeting testing 156.45 as a next positive station.

Therefore, the bullish trend will be expected on the intraday and short-term basis, taking into consideration that breaking 154.96 will stop the expected rise and push the price to decline again.

The expected trading range for today is between 154.70 support and 156.40 resistance

Trend forecast: Bullish

The EURUSD price opened today’s trading with strong bearish gap that pushed the price to touch the extended waited target at 1.0220$, affected by Trump decision to impose Tariffs on Canda and Mexico, and mentioning the chances of expanding the Tariffs to reach the European Union countries, to fall under expected negative pressure in the upcoming period, noting that breaking the current areas will push the price to visit 1.0100$ barrier as a next main station.

Therefore, we expect to witness more decline in the upcoming sessions, noting that failing to break 1.0220$ will lead the price to start recovery attempts and head to test 1.0325$ initially.

The expected trading range for today is between 1.0140$ support and 1.0300$ resistance

Trend forecast: Bearish

The GBPJPY pair provided more negative closings recently below 194.10 barrier, hinting its surrender to the domination of the bearish bias to notice crawling towards 190.20 this morning and record some negative targets mentioned in our previous report.

Note that the negative momentum coming by the major indicators will increase the chances of attacking 189.50 support line, while breaking it will confirm its preparation to resume the negative attack until reaching 188.15 followed by reaching the next support at 187.55.

The expected trading range for today is between 189.50 and 192.00

Trend forecast: Bearish

February 2, 2025 – Written by Frank Davies

STORY LINK Pound to Dollar Rate Forecast: GBP/USD to Open at Best 2025 Levels?

Foreign exchange analysts at UBS expect that the Pound to Dollar exchange rate (GBP/USD) will dip below 1.20 in the first quarter of this year before a recovery to 1.29 at the end of 2025 as the dollar loses ground.

Goldman Sachs expects a firm Pound tone, but that dollar strength will pin GBPUSD to 1.20 at the end of 2025.

GBP/USD hit 20-day highs above 1.25 during the week before a retreat to below 1.2400 amid trade fears.

Tariffs will certainly be a key short-term focus for the dollar and Pound given the economic and financial-market implications with the threat of high volatility.

On February 1st President Trump announced 25% tariffs on goods from Canada and Mexico with a lower 10% duty on Canadian oil.

Trump used the International Emergency Economic Powers Act (IEEPA) to impose tariffs from February 4th.

Trump also promised that 25% tariffs would also be applied to the EU.

There is still a high degree of uncertainty given the potential for negotiations and legal challenges, but the dollar could post near-term gains.

Trade tariffs will tend to damage risk appetite which will undermine the Pound.

There are also expectations that there will be domestic price increases which will make it more difficult for the Federal Reserve to control inflation.

According to Bank of America (BoA); “Overall it remains an environment that will likely be USD supportive in the near-term.”

The Fed held interest rates at 4.50% at the latest policy meeting which was in line with strong consensus forecasts.

At this stage, markets expect two rate cuts for the year with June the most likely timing for the first move.

Nordea commented; “With the possibility of import tariffs and a reduction of immigrant workers lifting inflation, the Fed will probably not feel confident that inflation risks have abated just from a couple of lower CPI prints. We therefore see it unlikely that the Fed will cut rates before the summer, and most likely they will not cut at all in the foreseeable future.”

BoA is not convinced dollar strength will be sustained; “Further out, we still see some downside US growth risks due to rising trade tensions and tighter immigration policies. While the Fed has shifted its tone, any notable turn lower in the labor market, or significant renewed progress in terms of moving inflation pressures lower, will likely spark renewed calls for more rate cuts than currently priced.”

Goldman expects a strong dollar, but did note some risks; “That said, the moves this week are a reminder that a key risk to our view is a repeat of 2017-style policy outcomes, when actual trade policy was largely unchanged—despite a lot of sound and fury—and the Dollar more than reversed its post-election gains.”

The Nasdaq index posted sharp losses after Chinese company DeepSeek claimed that it had created an AI application at a much lower cost than those developed by the US tech sector.

In response, there were heavy losses in the tech sector, but confidence returned later in the week.

Nomura commented; “If the US equity sell-off remains intense and continues in the coming weeks (e.g., Nasdaq is down ~20% or more from the peak), this could lead to a weaker USD.”

There are strong expectations of a Bank of England (BoE) interest rate cut to 4.50% from 4.75% while the medium-term outlook will be very important for the Pound.

According to ING; “Fiscal consolidation in March and a drop in services inflation through the second quarter should lead to a 100bp BoE easing cycle this year. This compares to just 68bp of easing priced by the market today. We see no reason to change our end-year GBP/USD forecast of 1.19/20.”

MUFG expects a dovish BoE stance; “We expect the communications and forecasts next week from the BoE to signal the scope for the MPC being more active in cutting rates this year.”

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February 2, 2025 – Written by David Woodsmith

STORY LINK Pound to Euro Week Ahead Forecast: GBP/EUR to Gain on Trump’s Tariffs?

Foreign exchange analysts at Bank of America still forecast that the Pound to Euro exchange rate (GBP/EUR) will strengthen to 1.25 at the end of 2025.

In contrast, ING forecasts that Pound Sterling (GBP) will retreat to 1.1765 against the Euro (EUR) currency.

Pound Sterling secured a net gain to around 1.1950 during the week amid further concerns over the Euro-Zone outlook with no major UK developments.

The US tariff developments will be a key near-term focus.

On February 1st President Trump announced 25% tariffs on goods from Canada and Mexico with a lower 10% duty on Canadian oil.

Trump used the International Emergency Economic Powers Act (IEEPA) to impose tariffs from February 4th.

Trump also promised that 25% tariffs would also be applied to the EU.

There is still a high degree of uncertainty given the potential for negotiations and legal challenges.

If, however, tariffs go ahead for a sustained period, there will be a negative impact on the Euro area and UK economies.

Berenberg Chief Economist Holger Schmieding commented; “For Europe, this is a mild negative in the sense that (Canada’s) negotiations with Trump did not yield a last-minute result and the European response has been to negotiate.”

Most investment banks consider that the EU is more vulnerable.

Bank of America (BoA) commented; “Crucially, the UK runs a trade deficit with the US, including a small deficit in the goods balance, which is the focus of “regular tariffs.” This leaves the Eurozone’s exports, heavy on autos and machinery, more exposed than those of the UK.”

It added; “We therefore like selling the upside above 0.8570 over the initial phases of the likely tariff impact.” (Buying GBP/USD on any dips to around 1.1670)

BoA also injected a note of caution; “tariffs could weigh further on EUR but bearishness getting stretched.”

According to Lloyds Bank; “The reality is that the challenges Europe faces have not disappeared and although sentiment might have steadied, the starting point is brittle.”

It added; “Increasing global trade frictions also reminds that the euro looks on the expensive side when measured on a real effective exchange rate basis.”

The ECB lowered the deposit rate by 25 basis points to a 22-month low of 2.75% which was in line with consensus forecasts.

Bank President Lagarde stated that the Euro-Zone economy will remain weak in the short term with risks still biased to the downside, but there is scope for a rebound later in the year.

According to flash data, Euro-Zone GDP was unchanged in the fourth quarter of 2024 compared with expectations of a 0.1% increase for the quarter with a 0.2% contraction for Germany.

Wells Fargo commented; “We see downside risk to our moderate Eurozone 2025 GDP growth forecast of 0.9%. Even with some lingering inflation pressures, the modest growth backdrop means ECB policymakers continue to signal easier monetary policy ahead.”

The UK economic outlook and bond market will be a key short-term influence.

Yields have stabilised and the Bank of England announced a new tool to support the bond market if stresses intensify.

According to ING; “While these efforts to restore confidence are very welcome – and have helped the sterling trade-weight index recover about 1% from lows earlier this month – we still feel sterling is vulnerable.”

There are very strong expectations that the BoE will cut interest rates to 4.50% at this week’s policy meeting.

The pace of rate cuts over the remainder of the year will be a key element.

ING added; “Fiscal consolidation in March and a drop in services inflation through the second quarter should lead to a 100bp BoE easing cycle this year. This compares to just 68bp of easing priced by the market today.

UBS expects rate differentials will be important; “the BoE is easing policy from a tight level, meaning that the existing rate differentials should continue to support total returns via the carry component. We also see EURGBP spot risks as skewed a little lower over time to 0.82 by year-end. (1.22 for GBP/EUR)

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TAGS: Currency Predictions Pound Euro Forecasts