– Written by


Frank Davies

STORY LINK Pound Sterling Forecast: US-Iran Peace Hopes Leave GBP/USD Rangebound

The Pound US Dollar (GBP/USD) exchange rate struggled to establish a clear trend on Monday, as uncertainty surrounding developments in the Middle East kept the currency pair unsettled.

At the time of writing, GBP/USD was trading at $1.3498, with the pair fluctuating since the start of the week.

The US Dollar (USD) struggled for direction at the start of the week as uncertainty surrounding US-Iran peace negotiations kept markets on edge.

President Donald Trump said the US was ‘semi-negotiating’ with Iran, while Tehran has reportedly sought compensation from Washington for damage caused by the war. Iran is also in talks with Oman over a partial reopening of the Strait of Hormuz, although it has outlined six conditions that Washington must meet before an agreement can be reached.

Elsewhere, Yemen’s Houthi militia targeted a Saudi oil refinery, while a missile struck a UAE oil tanker in the Strait.

With tensions continuing to cloud the outlook, the safe-haven US Dollar moved unevenly as market sentiment shifted.

The Pound (GBP) likewise lacked a clear direction, with a quiet UK economic calendar leaving Sterling to take its cues from developments in the Middle East.

Although markets retained a cautious risk-on bias as hopes lingered for a peace agreement between the US and Iran, the more risk-sensitive Pound found little support from the improved sentiment.

Near-Term GBP/USD Forecast: Risk Appetite Could Set the Tone

Looking ahead, the Pound to US Dollar exchange rate could remain sensitive to shifts in global risk appetite on Tuesday, with neither the UK nor US economic calendars offering much in the way of market-moving data.

Attention is therefore likely to remain fixed on developments in the Middle East. Evidence of progress towards a US-Iran agreement could lift risk appetite and reduce demand for the safe-haven US Dollar.

However, a fresh escalation in tensions could have the opposite effect, encouraging risk aversion and putting pressure on GBP/USD.

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USD/JPY Outlook: Intervention Caps 164 but Fundamentals Still Favour Dollar

The US Dollar to Yen exchange rate (USD/JPY) bounced back towards 159 on Monday, recovering from Friday’s 157.80 close but still sitting well below the late-July peak near 164.

Goldman Sachs thinks that lower level may prove temporary.

The bank estimates Japan’s latest intervention was “likely up to $85bn in 2 days; the largest 2-day operation since 2011”, with the US also taking part.

That was a powerful signal. It was not, in Goldman’s view, a substitute for policy.

“If pricing holds and the Board leaves rates unchanged, downward pressure on JGBs and JPY would reemerge,” the bank said, reflecting what it calls the “unstable equilibrium” of intervention without a subsequent policy change.

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USD/JPY remains well below July’s highs near 164, although the pair has begun to recover from the intervention-driven fall.

Goldman’s economists see “the odds of substantially faster or earlier BoJ rate hikes” as low, especially if a stronger Yen reduces the urgency for policymakers to act.

That helps explain why the bank has not materially changed its longer-run forecast profile.

Goldman sees USD/JPY at 162 in three months, 163 in six months and 165 in twelve months.

In other words, the intervention can change the path without necessarily changing the destination.

Near-Term USD/JPY Outlook: Fundamentals Still Point Higher

Goldman argues that the relatively muted follow-through after intervention reflects “the fundamental reasons for the currency’s weakness”.

“We expect depreciation pressures to reemerge over time absent a shift in global conditions or a policy surprise,” the bank said.

There is one important qualification.

“If the BoJ does hike in September, and there begin to be signs of reallocation towards domestic assets by domestic investors, the Yen can see stronger levels for longer.”

The broader bank consensus is less aggressive than Goldman’s twelve-month call. Median forecasts drift lower through 2027, while the range of estimates remains unusually wide.

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Bank forecasts remain highly dispersed, with the median path below current levels through much of 2027.

Goldman analysts sit on the more Dollar-bullish side of the debate.

Its central message is simple: the joint US-Japan operation can stop a disorderly run through 164, but unless rates, capital flows or the global backdrop change, intervention alone is unlikely to deliver a lasting Yen recovery.

Our currency coverage draws on live market data, official economic releases and published bank research.

Exchange Rates UK Research’s latest August 2026 survey of major investment banks points to a mixed near-term Pound-to-Dollar outlook followed by a stronger median forecast through 2027.

With GBP/USD currently around 1.3492, the median bank forecast stands at 1.33 for Q3 2026, around 1.34 for Q4, 1.35 for Q1 2027 and 1.36 for Q2. It then rises to 1.37 in Q3 and around 1.39 by Q4 2027.

The headline finding is therefore relatively straightforward: banks collectively see limited upside for sterling immediately, but the median projection eventually moves above today’s exchange rate and favours a stronger pound during 2027.

The full fx forecast range is considerably wider, extending from roughly 1.27 to 1.45 across 2027.

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Latest Survey Shows GBP/USD Median Rising Through 2027

The latest Exchange Rates UK Research poll includes forecasts from 25 major banks and institutions for the nearer quarters, and the dispersion of views is almost as important as the median.

For Q3 2026, forecasts range between 1.30 and 1.38, with the median around 1.33 sitting below spot.

By Q2 2027, however, the median has climbed to 1.36, followed by around 1.37 in Q3 and close to 1.39 in Q4.

The bullish camp includes Bank of America, which forecasts GBP/USD at 1.40 in Q2 2027, 1.43 in Q3 and 1.45 by year-end. UBS sees 1.41 by Q2, while ABN AMRO reaches 1.40 by the end of 2027.

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Scotiabank, TD Economics, CIBC and Westpac also envisage sterling strengthening into the upper 1.30s.

The bearish tail is substantial.

HSBC forecasts GBP/USD falling to 1.27 by Q2 2027, while Goldman Sachs and JP Morgan both have projections reaching 1.28. Citi maintains a prolonged low-1.30s profile.

This means the consensus should not be interpreted as banks uniformly expecting sterling appreciation. Rather, the centre of the distribution gradually moves higher while disagreement over the eventual destination remains unusually large.

US Jobs Shock Adds Another Variable to the Dollar Outlook

The survey arrives after an important change in the US macro picture.

July’s US employment report delivered a surprise decline in non-farm payrolls, while earlier months were revised lower. The weaker labour-market picture knocked the dollar and forced markets to reassess the likely path of Federal Reserve policy.

That provides some fundamental support for the more bullish GBP/USD forecasts in the survey: a weaker US labour market could eventually reduce the interest-rate support enjoyed by the dollar.

There is nevertheless a strong counterargument. US inflation pressures have not disappeared, leaving the Federal Reserve balancing a softer labour market against persistent price risks.

The UK picture is similarly nuanced.

Sterling’s outlook remains sensitive to the balance between UK inflation, economic growth and the Bank of England’s policy stance.

Changes in expectations for the relative paths of UK and US interest rates could therefore remain one of the most important drivers of GBP/USD over the remainder of 2026 and into 2027.

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GBP/USD Outlook: 1.30 or 1.45?

The latest Exchange Rates UK Research survey does not point towards an immediate Pound-to-Dollar breakout.

Its Q3 median around 1.33 implies some downside from current levels near 1.35, while the Q4 median sits much closer to today’s exchange rate.

The picture becomes more constructive further ahead.

Median forecasts around 1.36, 1.37 and 1.39 through 2027 suggest investment banks collectively expect the balance to shift gradually in sterling’s favour.

For anyone with longer-term exposure to GBP/USD, however, the unusually broad forecast range deserves attention.

By late 2027, individual projections stretch from around 1.30 to 1.45.

The difference reflects sharply contrasting assumptions about Federal Reserve policy, US inflation and growth, and whether sterling can maintain sufficient interest-rate and economic support.

The median points towards a higher GBP/USD exchange rate over time.

The breadth of the latest bank forecasts suggests getting there could be anything but straightforward.

Read Exchange Rates UK’s Sentiment Survey results with extensive data/charts here.

UK analysts expect EUR/GBP to move higher as fading BoE rate-hike bets and autumn Budget concerns expose the Pound Sterling to renewed selling pressure.

The Euro to Pound exchange rate (EUR/GBP) held near 0.8580 on Thursday, with Rabobank favouring further gains as the summer draws to a close.

EUR/GBP has recovered from July’s low near 0.8455 after Sterling’s earlier rally ran out of steam.

The pair fell 0.72% last month, but has since climbed for three consecutive sessions and is up around 0.27% in August.

Rabobank notes that the Pound is now the third-worst performing G10 currency over one month, ahead of only the Swiss Franc and US Dollar.

“This performance may in part be a function of pared-back expectations regarding BoE rate hikes,” the bank said.

It may also reflect a measured response to the new UK government. Political news is likely to remain limited while Parliament is in recess, but attention is already turning towards Chancellor Healey’s October 28 Budget.

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EUR/GBP has rebounded from below 0.8470 and is now testing the upper end of its August range.

Prime Minister Burnham has promised growth across the country while remaining within the existing fiscal rules and avoiding tax increases on workers. The unresolved issue is how the government intends to pay for its plans.

“Some news regarding the forthcoming budget has been seeping out and this could be setting up both the gilts market and GBP for friction into the autumn,” Rabobank said.

The government is reportedly considering a more flexible definition of infrastructure spending and equity investments as assets, potentially creating another £9bn of room.

While markets may tolerate extra borrowing if it funds credible growth projects, Rabobank warns that it would still imply greater Gilt issuance, which “could weigh on gilts prices and unsettle the pound”.

EUR/GBP Outlook: Rabobank Targets a Break Above 0.8588

Monetary policy presents a second downside risk for Sterling.

Rabobank believes markets continue to overestimate the likelihood of another Bank of England rate hike this year, particularly if energy prices ease as geopolitical tensions cool.

“Although three members of the MPC voted to hike rates at the July policy meeting, we anticipate that there is a high bar to further members moving camps,” the bank said.

Governor Bailey has highlighted slower services inflation, weaker household demand and a looser labour market as reasons to expect inflation pressure to fade.

“These arguments indicate a strong reluctance by Bailey to tighten policy,” Rabobank said. “In our view, the Bank is likely to keep interest rates on hold for the remainder of the year.”

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The latest bank consensus shows median EUR/GBP forecasts rising above current levels into late 2026 and 2027.

Rabobank expects a repricing towards unchanged Bank Rate, combined with pre-Budget nervousness, to put the Pound under pressure.

“We favour buying EUR/GBP on dips to the 0.8550 area,” the bank said. “A break above the recent high in the 0.8588 region could increase upside potential.”

The immediate range remains tight, but the balance of risks is shifting. Sterling’s rate support is fading just as the UK’s fiscal debate starts to return.

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EUR/GBP remains 1.66% lower in 2026, although the pair has recovered sharply from July’s lows.

BitcoinWorld

EUR/USD Forecast: Hawkish ECB Bets Back Fresh Upside

The euro is finding renewed strength against the US dollar as markets increase bets on a more hawkish European Central Bank (ECB) policy path, with traders pricing in a higher likelihood of rate hikes in the coming months. This shift in expectations is providing fresh upside momentum for the EUR/USD currency pair, which has been trading in a range but now appears poised for a breakout.

Why Hawkish ECB Bets Are Supporting the Euro

The core driver behind the euro’s recent resilience is the market’s growing conviction that the ECB will maintain a tighter monetary policy stance compared to earlier expectations. Recent comments from several ECB policymakers have signaled a willingness to continue raising interest rates to combat persistent inflation in the eurozone, even as the region’s economic growth shows signs of slowing. This contrasts with the Federal Reserve, which is widely expected to pause its rate hiking cycle, creating a policy divergence that favors the euro.

According to money market pricing, the probability of a 25-basis-point rate hike at the ECB’s next meeting has risen sharply over the past week. This repricing has been fueled by stronger-than-expected inflation data from key eurozone economies, particularly Germany and France, which have shown that price pressures remain sticky. As a result, the yield differential between German and US government bonds has narrowed, making euro-denominated assets more attractive to investors.

Technical Levels to Watch in EUR/USD

From a technical perspective, EUR/USD has been building a base above the 1.0800 support level, with the pair now attempting to break above its 200-day moving average. A sustained move above this key indicator could open the door for a test of the 1.1000 psychological level, which has acted as resistance in recent months. On the downside, the 1.0700 area remains a critical support zone, and a break below that could signal a bearish reversal.

Traders are also watching the Relative Strength Index (RSI), which has been hovering around the 50 mark, indicating a neutral momentum. However, a clear break above 60 would suggest that bullish momentum is building. The recent price action suggests that the market is positioning for a potential upside breakout, with the pair having formed a series of higher lows since early March.

Market Implications and What to Watch

For traders and investors, the key takeaway is that the EUR/USD pair is at a pivotal juncture. The combination of hawkish ECB expectations and a softer US dollar is creating a supportive environment for the euro. However, the pair’s direction will largely depend on upcoming economic data and central bank communications. The next major test will be the release of the eurozone’s flash CPI data for May, which is due in the coming days. A hot reading could cement expectations of further ECB tightening and push the pair higher.

Additionally, the minutes from the Federal Reserve’s latest meeting, scheduled for release this week, could provide further clarity on the US rate outlook. If the minutes reveal a more dovish tone, it would likely weigh on the dollar and provide additional support for EUR/USD. Conversely, any surprises in the data could lead to increased volatility.

Conclusion

In summary, the EUR/USD pair is being supported by a shift in market sentiment towards a more hawkish ECB, which is backing fresh upside in the exchange rate. While the technical picture suggests a potential breakout, the pair’s trajectory will be heavily influenced by upcoming economic data and central bank communications. Traders should remain cautious and monitor key levels and events to navigate the evolving landscape.

FAQs

Q1: What is driving the EUR/USD forecast?
The EUR/USD forecast is being driven by increasing market bets that the European Central Bank will maintain a hawkish policy stance, with rate hikes expected, while the Federal Reserve is seen as more likely to pause. This policy divergence is supporting the euro.

Q2: What are the key technical levels to watch in EUR/USD?
Key technical levels include the 1.0800 support, the 200-day moving average around 1.0850, and the 1.1000 resistance level. A break above the 200-day MA could signal further upside, while a drop below 1.0700 would be bearish.

Q3: How does ECB policy affect the euro?
ECB policy directly influences the euro’s value through interest rates. When the ECB signals higher rates or maintains a hawkish stance, it makes euro-denominated assets more attractive, potentially strengthening the euro against other currencies like the US dollar.

This post EUR/USD Forecast: Hawkish ECB Bets Back Fresh Upside first appeared on BitcoinWorld.

– Written by


James Fuller

STORY LINK Pound-Yen Forecast: Intervention Keeps 216 Ceiling in Focus

The Pound to Japanese Yen exchange rate (GBP/JPY) ended Friday near 212.91 following a volatile week, with the Yen supported by coordinated US-Japan intervention and a shock decline in US payrolls.

Pound Sterling recovered from the August low near 209.63, but remained well below July’s 219.61 high as traders stayed wary of renewed intervention and faster Bank of Japan tightening.

GBP/JPY Forecasts: 209–216 range in focus

ING expects USD/JPY to remain broadly contained between 155 and 160 following official action to support the Yen.

With GBP/USD trading close to 1.35, that range would imply GBP/JPY levels of around 209–216 if Sterling-Dollar remained broadly unchanged.

This is an implied cross-rate range rather than a direct ING forecast for GBP/JPY.

According to ING; “We struggle to see this bilateral action driving USD/JPY sustainably below 155.”

GBP/JPY closed at 212.91, around 0.3% higher over the week after trading between 209.63 and 213.31 during August.

The pair remains more than 3% below July’s high of 219.61, recorded before Japanese and US authorities stepped into the market.

ING described the intervention as a “containment exercise” rather than an attempt to force a lasting Yen revaluation.

The bank commented; “This intervention does not change the fundamentals of a Fed close to hiking and Tokyo running a loose set of monetary and fiscal policies, which are weighing on the Yen.”

That assessment was made before Friday’s US employment report weakened one of the principal sources of support for USD/JPY.

ING nevertheless expects the intervention to limit investors from chasing USD/JPY above 160, buying time for Tokyo to introduce more Yen-supportive policies.

Crédit Agricole is less convinced that the intervention gains will last.

The bank forecasts USD/JPY averaging 162 during the third quarter and 163 in the fourth quarter.

At current Sterling-Dollar levels, these projections would be consistent with GBP/JPY near 218.60 and 219.90, although these are implied calculations rather than direct Crédit Agricole forecasts.

According to Crédit Agricole; “We continue to believe 164 in USD/JPY is the line in the sand for authorities. The recent joint intervention has reaffirmed this view.”

It added; “If the fundamentals do not shift for the JPY, its current intervention gains could also fade.”

The Yen strengthened again on Friday after US non-farm payrolls unexpectedly fell by 23,000 in July, compared with forecasts for an 80,000 increase.

The weak report pushed US yields lower and reduced expectations of a September Federal Reserve rate hike, sending USD/JPY briefly below 157.

Sterling’s own interest-rate support also remains uncertain.

MUFG commented; “Yield support has underpinned Sterling resilience,” but added; “We suspect the move at the front-end of the curve is now overdone.”

The bank warned that easing energy risks could lower UK yields and take the Pound lower, while renewed financial-market volatility would also be likely to undermine Sterling.

In the near term, ING’s implied 209–216 range offers the clearest guide for GBP/JPY.

A renewed Yen surge would bring the August low at 209.63 back into focus, while a recovery above 213.31 could open a move towards 216.

Crédit Agricole’s implied 218–220 region would require the intervention impact to fade and Sterling to remain firm, while further official action or stronger Bank of Japan tightening signals would keep the downside risks dominant.

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TAGS: Pound Yen Forecasts