The pair ended its latest bearish wave after testing the support level at 174.95 and settling above it, delaying the bearish pressure, to form strong bullish corrective move, by reaching around 176.50.

Note that breaching 176.50 and holding above it could strengthen the chances of targeting further corrective levels. We expect reaching 177.10, followed by an attempt to test the next resistance barrier at 177.80. However, failure to breach this level would force the pair into mixed trading until it gathers sufficient negative momentum to renew its attempts to pressure the previously mentioned support.

The expected trading range for today is between 175.70 and 177.10

Trend forecast: Bullish

GBP/USD is trading near 1.3403 on the 4-hour chart, up about 0.1% today. The pound jumped to 1.3434 on Friday, pulled back to 1.3379, and is climbing again. A rising trendline, a line connecting higher lows since October 14, supports the move, and both moving averages are below price.

The first resistance, where sellers tend to step in, is 1.3434, then 1.3470. The first support, where buyers tend to step in, is 1.3379, then 1.3340.

Japanese Yen Forecast: ING Brings BoJ Hike Call Forward to December

ING expects an earlier Japanese rate rise, but sees the Yen struggling against the US Dollar before a more durable recovery in the second quarter of 2027.

The US Dollar to Yen exchange rate ended Friday around 157.58, down 0.16%, as the Bank of Japan left rates unchanged but strengthened its assessment of underlying inflation.

ING now expects the next increase in December 2026, followed by another in March or April 2027, yet its currency outlook remains cautious about an immediate Yen recovery.

Chris Turner, ING’s global head of markets, writes: “We see it staying bid towards the top of a broad 155-160 range and then turning lower in 2Q next year.”

That places the anticipated turn in USD/JPY in April-June 2027.

The question after the BoJ meeting is how much additional support the Yen can draw from tightening that investors already expect.

Inflation progress does not settle the next meeting

The BoJ’s 30 October decision held the overnight rate at 1.25% by an eight-to-one vote, with Hajime Takata favouring an immediate increase to 1.50%.

Its updated economic outlook judged underlying inflation broadly consistent with the 2% target and highlighted upside price risks, while keeping further rate rises dependent on economic and financial developments.

Turner sees international policy as an additional reason to act sooner:

“The BoJ also gave a nod to rate hikes overseas and presumably will be aware of the risks of a weaker yen should it not track the Fed and ECB with a rate hike in December. We now think the BoJ will hike in December, with a likely follow-up in March/April.”

An increase in Japanese rates need not narrow the country’s yield disadvantage if US and European rates rise too.

That leaves room for the BoJ to tighten while the Dollar remains attractive to investors seeking higher returns.

MUFG also favours December.

In its initial response to the decision, the bank wrote:

“Overall, the BoJ’s updated policy communication struck a hawkish tone. The relatively muted market response with USD/JPY largely unchanged on the day is more a reflection that it is already well priced in.”

The pre-meeting case for a stronger Yen now has support from the BoJ’s assessment of inflation, though banks disagree on how quickly policy will follow.

Exporter buying adds support

UBS sales-desk commentator Sara Onozato gives more weight to the change in investors’ confidence that the BoJ will keep raising rates.

“For the yen, the shift is supportive: previous BOJ meetings frequently resulted in yen selling as investors questioned the central bank’s willingness to tighten policy, but more frequent rate hikes and a clearer normalization path appear to be changing that perception.”

Onozato adds:

“Exporter demand for yen and the unwinding of yen-short hedges amid weaker equities are providing additional support.”

Exporters converting overseas earnings and investors closing positions against the Yen can generate buying even before another rate increase takes place.

It offers a reason the Yen could improve sooner than ING’s broader timing suggests, particularly if weaker equity markets continue to encourage investors to reduce exposure.

Waiting for the investment plans

Crédit Agricole favours January, allowing time to assess the government’s investment plans:

“After the Cabinet approves the implementation plan for the government’s Japan Growth Strategy and the FY27 budget proposal in late December, the BoJ is expected to review economic and price developments in its Outlook Report and deliver its next rate hike in January next year.”

“Accelerating rate hikes in response to external factors while domestic demand, including investment activity, remains weak will weigh on economic growth, likely leaving FY27 growth below the government’s target.”

The economists add: “As external factors stabilise, concerns over excessive inflation should also ease, allowing subsequent rate hikes to return to a pace of roughly once every six months.”

That contrasts with the December camp’s emphasis on the danger of allowing inflation to overshoot and the Yen to weaken as other central banks tighten.

What This Means for USD/JPY

ING’s outlook allows renewed Dollar strength within its broad range before a turn lower in Q2 2027. A December hike alone would therefore be consistent with its cautious near-term Yen view.

The stronger case for an earlier Yen recovery combines credible BoJ follow-through with the exporter buying and reduced equity exposure highlighted by UBS. Disappointing Japanese guidance or renewed US yield strength would make that recovery harder to sustain.

Crédit Agricole’s January call leaves a different risk for December: the BoJ could judge that supporting domestic growth warrants waiting. If investors are still positioned for an earlier increase, that delay could weaken the Yen even while further tightening remains likely.

Crude oil prices remain strong near the resistance levels. The high cost of energy remains a risk to the purchasing power of households and company profits. These data suggest that the possibility of further hike by the BOJ remains in play.

I think that if expectations for Japanese rate increases relative to Federal Reserve, ECB and Bank of England rise, this could support the yen and weigh on USDJPY, EURJPY and GBPJPY.

USDJPY Forecast: 156 Support and 159 Resistance Define the Range

From a technical perspective, USDJPY has been trading within the ascending broadening wedge pattern that stretches from the April 2025 lows. The pair hit a low at the 152.88 level in September and produced strong rebound towards the 159 level.

Now, the pair is consolidating in a tight range between the 159 and 156 levels and is looking for the next direction. A break above 159 may push the pair towards 160, which is the key level for the short-term direction.

EUR/GBP Forecast: Société Générale Targets 0.87 by September 2027

Pound Sterling’s recent gains mask an increasingly expensive currency, Société Générale says, as UK fiscal tightening threatens support against the Euro.

Foreign exchange analysts at Société Générale expect the Euro to recover to 0.87 against the Pound by the end of the third quarter of 2027, arguing that Pound Sterling‘s strength is becoming harder to justify as UK prices outpace those elsewhere in Europe.

The bank still forecasts EUR/GBP at 0.84 at the end of 2026, allowing for further Euro weakness before the recovery.

At the time of writing, the Euro to Pound exchange rate was near 0.8449, little changed on Tuesday but around 1.1% lower since the end of September.

Kit Juckes, Société Générale’s currency strategist, acknowledges the support Sterling has enjoyed: “The widening in European yield differentials of recent days has given GBP support and dragged EUR/GBP down close to last summer’s lows.”

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A steady exchange rate can conceal an expensive Pound

Juckes puts today’s valuation in the context of the past decade: “More recently, EUR/GBP has spent a decade trading within a relatively narrow range, equivalent to between FRF 7 and FRF 8, or 0.82 to 0.94 in EUR/GBP terms. The challenge facing sterling is that, over this ten-year period of range-bound trading, its real, inflation-adjusted value has appreciated by around 20%.”

Faster domestic price rises make British output more expensive relative to overseas competitors unless the currency weakens to compensate.

Juckes writes: “This has made foreign holidays (Switzerland excluded) feel more affordable, but it has also weighed on exporters.”

Juckes adds: “Tighter fiscal policy is coming; the balance of payments remains a threat and the pound is getting steadily more expensive in real effective terms as inflation exceeds levels elsewhere in Europe.”

The 28 October Budget will put those fiscal choices before investors.

Higher taxes or restrained spending could reassure government lenders while also weakening demand, limiting the economic support behind Sterling.

The Euro (EUR) has obstacles of its own

An expensive Pound does not make a Euro rebound immediate.

In its assessment of the single currency, Société Générale writes: “Higher bond yields, globally, have sent French and Italian yields higher and revived concerns about fiscal sustainability. Elevated energy prices are as bad for the euro now as they were in 2022/2023. In short, the backdrop is unambiguously negative, and for now, the euro remains vulnerable.”

Our recent coverage of France’s fiscal problems limiting the Euro’s appeal examined the same difficulty for investors seeking an alternative to Sterling before the UK Budget.

Société Générale also sees limits to further selling, pointing to large bearish Euro positions in futures markets.

Juckes writes: “The size of the position, combined with the extent of the bad news already priced in, suggests that although downward pressure on the euro will persist as long as oil prices remain elevated and government bond markets remain unsettled, further downside in EUR/USD may be limited.”

That observation concerns the Euro against the Dollar, but provides a qualification to the bank’s broader pessimism about the single currency.

EUR/GBP exchange rate FAQ

What is Société Générale’s Euro to Pound forecast?

The bank forecasts EUR/GBP at 0.84 at the end of 2026 and 0.87 at the end of the third quarter of 2027.

Why does Société Générale expect the Euro to recover?

It argues that Sterling has become increasingly expensive after adjusting for inflation, while tighter UK fiscal policy and external financing risks could constrain the Pound.

Does the forecast imply an immediate Euro rebound?

No. The bank allows for further weakness this year before a recovery in 2027, with European fiscal concerns and high energy prices still weighing on the Euro.

Pound Sterling Outlook: Rabobank Adds February BoE Hike After Budget

Rabobank sees Budget relief supporting Pound Sterling, but its new call for an extra BoE hike complicates the case for weakness against the Euro and US Dollar.

The Pound to Dollar exchange rate finished Friday at $1.3389, leaving Pound Sterling 0.94% higher over October after a Budget that avoided the disruption investors had feared.

Rabobank’s post-Budget currency projections allow little further upside over three months, with GBP/USD at $1.34 around late January 2027, before a retreat to $1.30 over 12 months, around late October 2027.

Those projections accompanied a view that markets expected too many Bank of England rate increases.

Since then, Rabobank’s economists have added another hike to their own outlook, changing an important assumption behind the currency analysis without supplying replacement exchange-rate targets in that update.

A February hike changes the policy argument

Before Friday’s policy revision, Rabobank senior FX strategist Jane Foley wrote:

“In RaboResearch’s view, the market continues to price in too much BoE policy tightening. Our central view is that the Bank is unlikely to hike more than once more this cycle. If the market unwinds rate hike speculation, GBP is at risk of being undermined into 2027.”

Lower expected UK rates would reduce the prospective return on Pound Sterling assets, potentially offsetting the reassurance delivered by the Budget.

But on Friday, Rabobank economist Stefan Koopman forecast a quarter-point increase in November to 4.00% and added another in February to 4.25%, citing persistent energy inflation despite limited evidence of wider wage and price spillovers.

That later assessment gives Pound Sterling more interest-rate support than the one-hike assumption in Foley’s analysis.

It does not establish that the currency forecasts have changed, or that all the tightening investors expect will materialise.

The BoE’s next decision and economic forecasts arrive on 5 November, providing an early test of how far policymakers believe rates need to rise.

Why an uneventful Budget can help Pound Sterling

Foley wrote: “The silver lining of the Truss budget is that no other UK politician wants to repeat the same mistake. In contrast to the situation in some other G7 countries, it is clear to both politicians and the electorate that government spending is constrained by the country’s high level of debt.”

She also identified a vulnerability in the ownership of UK government bonds:

“The fact that around 30% of gilts are held by foreign investors naturally implies that the pound is sensitive to a selloff in government debt.”

If overseas investors reduce exposure to British bonds and convert the proceeds into other currencies, that selling can put pressure on Pound Sterling as well as raise government financing costs.

Avoiding such a shock matters particularly when investors have already positioned for weakness.

Foley’s analysis showed speculators holding net short Pound Sterling positions ahead of the Budget, leaving scope for buying if they closed those bets.

Foley wrote: “Indeed, the lack of any market drama around the budget could give way to a little near-term relief in the pound.”

The published fiscal plans leave £15 billion of headroom against the current-budget rule in 2029/30, down from £23.6 billion in March.

That is the forecast cushion for meeting the rule, rather than money held in reserve.

Foley acknowledged the deterioration: “A reduction in the fiscal headroom is not good news, but crucially this is a self-imposed discipline. Compared with some other G7 countries, at least the UK has a budget consolidation plan in place.”

Foley points to competing demands: “On top of that, the experience of former PM Starmer suggests that welfare reform will be tough particularly given the ageing demographic. At the same time Healey has announced that defence spending will rise to 3% of GDP by 2030.”

Delivering that plan remains difficult, as the spending pressures left for 2027 make clear.

The Institute for Fiscal Studies’ Budget response warns that tight public-service spending assumptions leave the planned reduction in borrowing vulnerable.

French risks have helped GBP/EUR

The Pound-to-Euro exchange rate finished Friday at €1.1997, having gained 2.45% over October.

Foley wrote:

“EUR/GBP has trended lower over the last month as French budget concerns triggered fears of contagion in other highly indebted European nations. These events have weighed on the EUR and cast a relatively positive light on the pound.”

Rabobank’s three-month EUR/GBP forecast of 0.84 translates to approximately €1.1905 per Pound, calculated by Exchange Rates UK, slightly below Friday’s level.

What This Means for GBP/USD and GBP/EUR

GBP/USD has already reached the vicinity of Rabobank’s three-month projection. Its projections leave little additional near-term upside, while its added February hike makes next week’s BoE guidance particularly relevant.

GBP/EUR has benefited from a comparison between two strained fiscal positions. Progress towards a credible French budget could weaken that advantage even if confidence in UK policy holds.

For Pound Sterling, the risk is that inflation keeps interest rates and debt-servicing costs high while spending commitments erode the government’s smaller fiscal cushion.

In the European market, the euro tried to rally a bit during the trading session. Today, third-quarter euro area GDP was released, with the flash estimate coming in at 0.4% quarter-on-quarter, down from 0.6% during the previous quarter. That being said, it’s also worth noting that the ECB held its deposit rate at 2.5% yesterday. That was not a huge surprise; it was expected.

Its statement did warn that higher energy prices posed upward inflation risk and downward growth risk—not a combination we want. So, with that being the case, this is a market that I think we should continue to fade rallies. We’ve already seen that today. If we can break below 1.11, I’ll be aiming for 1.10. Full disclosure: I’m already short of this market and have no interest in buying it.

Retail Sales increased by +2.3% year-over-year in September, compared to analyst consensus of +3.3%. Industrial Production grew by +2.2%, while analysts expected that it would increase by +1.3%. The report did not have a material impact on market dynamics as traders have mostly focused on BoJ decision.

Both Fed and BoJ decided to take a pause, and USD/JPY traders remained in wait-and-see mode. The Japanese yen remains fundamentally weak, but bulls are worried that BoJ may intervene in case USD/JPY climbs towards the 160.00 level.

In case USD/JPY stays below the 50 MA at 157.57, it will head towards the 157.00 level. A move below 157.00 will push USD/JPY towards recent lows near 156.00.

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Euro: Lagarde to Leave Early

The ECB kept its deposit rate at 2.5% on Thursday, hours after President Christine Lagarde said she will step down on February 7, 2027, nine months before her term ends, because she can no longer “remain neutral.” Lagarde said the Governing Council debated a hike before holding unanimously, and signaled the pause may only last until December. She noted the average eurozone 10-year bond yield has risen about 35 basis points, or 0.35 percentage point, since the September projections, and told high-debt governments to plan for rates staying higher for some time and keep budgets within EU rules, Euronews reported. She avoided naming France, blaming global factors instead.

The euro briefly fell to its lowest since May 2025 on Thursday and is on track for a 1.2% monthly drop, Reuters said, even though the ECB just talked about hiking. That shows the French bond problem and the leadership gap matter more to traders than one extra rate move. Eurozone third-quarter GDP data are due Friday.

The pair has continued to form weak sideways trades so far, amid ongoing conflicting signals from the main indicators, currently fluctuating near 176.25 and moving away from support at 174.90, which represents the key level for confirming the continuation of the bearish trend in the upcoming period.

The price may manage to achieve some intraday gains; however, its repeated stability below the additional resistance barrier at 177.80 keeps us committed to our bearish outlook for the coming trades. On the other hand, breaking above this barrier and holding above it would increase the chances of further gains toward 178.50 and 179.10.

The expected trading range for today is between 175.70 and 176.85

Trend forecast: Fluctuating