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.
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.
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.
British Pound PRICE This week
The table below shows the percentage change of British Pound (GBP) against listed major currencies this week. British Pound was the weakest against the Japanese Yen.
USD
EUR
GBP
JPY
CAD
AUD
NZD
CHF
USD
0.66%
-0.06%
-0.35%
0.17%
-0.04%
0.03%
0.51%
EUR
-0.66%
-0.56%
-1.03%
-0.38%
-0.62%
-0.52%
-0.05%
GBP
0.06%
0.56%
-0.38%
0.18%
-0.00%
0.04%
0.52%
JPY
0.35%
1.03%
0.38%
0.52%
0.33%
0.59%
0.83%
CAD
-0.17%
0.38%
-0.18%
-0.52%
-0.19%
-0.14%
0.34%
AUD
0.04%
0.62%
0.00%
-0.33%
0.19%
0.10%
0.57%
NZD
-0.03%
0.52%
-0.04%
-0.59%
0.14%
-0.10%
0.48%
CHF
-0.51%
0.05%
-0.52%
-0.83%
-0.34%
-0.57%
-0.48%
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
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).
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
During the trading session on Tuesday, we have seen the US dollar attempt to stabilize against the Japanese yen, which has been quite strong over the last couple of days.
At this point, there are a lot of questions about where we are going next, but I believe that the market is in the process of trying to find the bottom.
After all, we have been pulling back quite significantly, and despite the fact that the market has fallen, there are a lot of different things at play right now that need to be paid close attention to.
Ultimately, the yields in Japan have been rising, and that has a major influence on the Japanese yen itself. The Bank of Japan is suddenly worried about inflation, and that of course comes into the picture as well. Ultimately though, the interest rate differential is still fairly wide, so while we have seen the Japanese yen appreciate against the US dollar, I suspect this is more of a “repricing” of interest rate differentials than anything else. It’ll be interesting to see on this plays out, but I do think that we are in the midst of trying to find the bottom near the ¥150 level.
Technical Analysis
The technical analysis for this USD/JPY pair suggests that we are getting close to forming some type of potential bottom, but we haven’t seen the bounce to reaffirm this. It’s worth noting that the 200 Day EMA sits just above, and it did offer a significant amount of resistance on the attempted recovery for the Tuesday session. Because of this, I think you’ve got a situation where the market is probably going to continue to go back and forth and try to sort out where to go next. In other words, volatility is probably going to be a feature, not a bug in this trading environment.
If we were to break down below the ¥150 level, that would be an extraordinarily negative sign, but right now I don’t see that happening easily. On the other hand, I think the breaking higher is going to take a little bit of effort, so with that being said, I suspect that short-term range bound trading will eventually be what we settle into.
EUR/USD struggles to stage a rebound following Tuesday’s decline.
The technical outlook points to a bearish shift in the near-term bias.
The Federal Reserve will release the minutes of the January policy meeting later in the day.
EUR/USD stays on the back foot and trades below 1.0450 after closing in the negative territory on Tuesday. The pair’s short-term technical outlook highlights a bearish tilt.
Euro PRICE This week
The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the weakest against the Japanese Yen.
USD
EUR
GBP
JPY
CAD
AUD
NZD
CHF
USD
0.48%
-0.25%
-0.36%
0.08%
-0.18%
-0.16%
0.56%
EUR
-0.48%
-0.57%
-0.87%
-0.30%
-0.57%
-0.54%
0.18%
GBP
0.25%
0.57%
-0.19%
0.27%
0.05%
0.03%
0.75%
JPY
0.36%
0.87%
0.19%
0.44%
0.22%
0.42%
0.89%
CAD
-0.08%
0.30%
-0.27%
-0.44%
-0.23%
-0.24%
0.48%
AUD
0.18%
0.57%
-0.05%
-0.22%
0.23%
0.03%
0.74%
NZD
0.16%
0.54%
-0.03%
-0.42%
0.24%
-0.03%
0.72%
CHF
-0.56%
-0.18%
-0.75%
-0.89%
-0.48%
-0.74%
-0.72%
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
EUR/USD came under modest bearish pressure in the American session on Tuesday as markets adopted a cautious stance. US President Donald Trump said late Tuesday that they are looking to impose tariffs on car imports “in the neighborhood of 25%” as early as April 2. He also noted that they are also planning to charge similar duties on pharmaceutical and semiconductor imports.
Meanwhile, European Central Bank (ECB) policymaker Fabio Panetta said early Wednesday that the signs of weakness in the Eurozone economy seem to be more persistent than anticipated, making it difficult for the Euro to stay resilient against its rivals.
Later in the American session, the Federal Reserve will publish the minutes of the January policy meeting. According to the CME FedWatch Tool, markets see virtually no chance of a rate cut in March. This publication is unlikely to influence the market pricing of the Fed rate outlook in a significant way. Hence, the risk perception could continue to drive the US Dollar’s valuation and impact EUR/USD’s action. At the time of press, US stock index futures were trading marginally higher on the day. A bullish action in Wall Street after the opening bell could help EUR/USD hold its ground.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart declined below 50, reflecting a bearish tilt in the short-term outlook.
On the downside, 1.0440 (Fibonacci 61.8% retracement level of the latest downtrend) aligns as a key pivot level. In case EUR/USD confirms this level as resistance, 1.0400 (100-period SMA, Fibonacci 50% retracement), 1.0370 (200-period SMA) and 1.0350 (Fibonacci 38.2% retracement) could be seen as next support levels.
Looking north, resistances could be spotted at 1.0500-1.0510 (round level, Fibonacci 78.6% retracement), 1.0550 (static level) and 1.0600 (static level, beginning point of the downtrend).
Euro FAQs
The Euro is the currency for the 19 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
The British pound has gone back and forth during the trading session against the Japanese yen on Tuesday as we continue to see a lot of noisy volatility.
All things being equal, I think we will be paying attention to technical analysis more than anything else here because the Japanese yen has been very noisy to say the least.
Remember, the bank of Japan now is starting to complain about inflation, which is something that we’re not used to seeing.
The Japanese yen has strengthened as a result as interest rates are going higher in Japan. But at the same time, you also have to recognize the fact that the interest rate differential between Great Britain and Japan are about a mile wide. So I think you’ve got a situation where buyers will try to pile back into this GBP/JPY pair sooner or later.Top Forex Brokers1 Get Started 74% of retail CFD accounts lose money Is Sterling Going to Rise Globally?This would be especially true if the British pound continues to strengthen against other currencies like the dollar, but we’ll just have to wait and see. Speaking of technical analysis, when you look at this, it’s hard not to notice that the 50-day EMA as well as the 200-day EMA is sitting just above and offering resistance. In this environment, we could see a scenario where if we can break above there, then it opens up a move to the 195 Yen level underneath the 190 yen level, I think it continues to be very important as support. And I do think that we try to hold that if we were to break down below there, then the 188 yen level could be an area of interest as well. But really, at this point in time, I think we are starting to stabilize and should eventually see some type of impulsive candlestick that we can follow.EURUSD Chart by TradingViewBegin trading our daily forecasts and analysis . Here is a list of Forex brokers in Japan to work with.
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The British pound has initially fallen during the trading session on Tuesday but then turned around to show signs of life as the market continues to pressure to the upside in general.
All things being equal, it’s probably worth noting that we are stuck between the 50 Day EMA below, and the 200 Day EMA above.
As we are sitting right in the middle of these 2 crucial moving averages, it is probably worth noting that this typically will lead to some type of volatility.
It’s worth thinking about the fact that the British pound has shot straight up in the air as of late, and while it has been a fairly impressive move, the reality is that we are still in a downtrend, if for no other reason than the fact that we are below the 200 Day EMA. Granted, it is only quite obvious by the time we break above there that the trend has changed, but it was such a massive plunge for the British pound that it will be interesting to see whether or not that is easily reversed.
Technical Analysis
As mentioned previously, we are sitting between the 50 Day EMA and the 200 Day EMA moving averages, both of which are widely followed. The 1.25 level below is significant support, while the 1.2750 level above is a major ceiling. If we can break above the 1.2750 level, then it opens up the possibility of a bigger move, but ultimately, I think that we have a situation that will continue to be very noisy, as the Federal Reserve is likely to stay tight, while the Bank of England may have to continue to move. It will have to be a “wait and see” situation as far as interest rate differential is concerned, but most of what’s moving this market here I believe is the US dollar itself, and interest rates in America as traders are starting to come into focus yet again. Expect noise in this general vicinity overall.
The GBPUSD price didn’t show any strong move in the previous sessions, to continue moving around 1.2605$ level, thus, no change to the expected bullish trend scenario for the upcoming period, which targets 1.2680$ followed by 1.2765$ levels as next positive stations, reminding you that breaking 1.2605$ and holding below it will push the price to start bearish wave that targets 1.2525$ followed by 1.2415$ areas mainly.
During trading on Tuesday, we have seen the US dollar strengthen a bit against the euro, which makes a certain amount of sense considering that we are at a major inflection point in this pair.
The 1.05 level is always going to be a bit difficult for traders to break above.
And at this point in time, it is showing its resilience as resistance.
That being said, I think there is a significant amount of resistance on the way into the 1.06 level above, and therefore we need to be very cautious about trying to get bullish on this EUR/USD pair just yet. If we break down below the 50 day EMA on a daily close, I do think that we will probably revisit the overall consolidation. This is a departure from recent action, as we had seen nothing but bullish action, but now it looks like we are starting to get a little overextended.
This is a scenario where I think you’re looking for cheap US dollars and you might be getting them right now. The next couple of days should be important and it could give us an idea as to where we might go over the longer term.
Still Don’t Believe the Euro
At this point though, I’m not interested in buying the euro until we break above the 1.06 level, so I look at this with skepticism still, and I think that probably will continue to be the case going forward. The most obvious answer for me is to assume that we are still very much in consolidation, with 1.05 being the resistance area, and the 1.02 level underneath being massive support. This has been a nice rally, but when you look at the totality of the move, it really hasn’t changed much. It just looks like we’re flailing around and looking for some type of directionality.
Platinum price surrendered to stochastic negativity this morning, to notice moving towards the minor bullish channel’s support line at 971.00$, hinting postponing the bullish attempts until gathering the positive momentum again.
We expect to get sideways trades now, noting that facing additional negative pressures might force it to crawl below the current support line to suffer losses by moving towards 958.00$ followed by attempting to test the next support at 950.00$, while rallying above 983.00$ again will reinforce the chances of renewing the bullish attempts, to target 1005.00$ as a first positive station.
The expected trading range for today is between 960.00$ and 983.00$
