January 28, 2025 – Written by Frank Davies

STORY LINK Pound to Euro (GBP/EUR) Exchange Rate Muted despite Upbeat German Data

The Pound Sterling was trapped in a narrow range against the Euro on Monday despite the release of some better-than-expected German data.

At the time of writing, the GBP/EUR exchange rate was trading at around €1.1889, virtually unchanged from Monday’s opening levels.

Although flat against the Pound (GBP), the Euro (EUR) gained ground against several of its counterparts on Monday following the release of Germany’s latest IFO business climate index.

The index ticked up in January, rising from 84.7, the lowest level since May 2020, to 85.1, surpassing expectations that it would remain unchanged.

This positive data from the Eurozone’s largest economy bolstered the Euro at the beginning of the week, especially amid a generally cautious market sentiment.

As a safe-haven currency, the Euro also benefited from the risk-averse trading environment on Monday.

On Monday, the Pound stayed largely muted against most of its peers, owing to a lack of fresh economic data releases.

This absence of new information left Sterling without a clear direction at the start of the week, however, saw the Pound remain relatively steady.

Given the anticipated scarcity of UK economic data throughout the week, it’s likely that the Pound will continue to oscillate without any major economic drivers influencing its movement.

Looking ahead to Tuesday, the main factor influencing the Pound Euro exchange rate will likely be several speeches from European Central Bank (ECB) officials.

Both ECB official Piero Cipollone and ECB President Christine Lagarde are set to speak on Tuesday.

If either policymaker hints at a potential ECB interest rate cut, EUR exchange rates could weaken as a result.

For the Pound, with UK data remaining sparse, GBP exchange rates are likely to continue struggling to find a clear direction this week.

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TAGS: Pound Euro Forecasts

Created on January 29, 2025

• The British Pound has rallied a bit during the early hours on Tuesday against the Japanese Yen as we continue to see a lot of noise.
• Ultimately, this is a pair that is currently struggling with the 200 day EMA and the 50 day EMA both being flat.
• So that does suggest there’s a little bit of lackluster trading.

However, it is also worth noting that the 195 yen level above gives us a nice area from which to judge this market. If we can break above that level, then I think it opens up a possible trade to the 200 yen level. Short-term pullbacks are more likely than not going to end up being buying opportunities with the 190 yen level underneath offering a bit of a floor.

Interest Rates Still Matter

All things being equal, the interest rate differential still favors the United Kingdom, and that’s not going to change anytime soon. So, if we see British Pound strength in general, that will almost certainly be felt here in spades. I don’t like the idea of shorting this pair, and I do believe that longer term traders are just simply collecting swap at the end of the day and are waiting for a continuation of the overall upward momentum that will eventually have this market testing the 200 yen level again. Anything above there probably opens up the possible move to the 208 yen level again, but right now I think we’re just killing time. I still favor the upside, but I’m not looking for anything major. I think if you are somewhat tactical with your entries, it’s probably a good market to take advantage of as it has been somewhat stable, and the market is likely to see a bit of back and forth trading set ups.

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January 29, 2025 – Written by David Woodsmith

STORY LINK Pound Sterling Slips vs Euro and Dollar as Tech Selloff Sparks Safe-Haven Demand

The Pound to Dollar exchange rate (GBP/USD) edged lower on Tuesday as risk-averse sentiment saw investors flock to the safe-haven Greenback.

At the time of writing, GBPUSD was trading near $1.2428, down approximately 0.2% from Tuesday’s opening levels.

The US Dollar (USD) continued its upward trajectory on Wednesday, consolidating gains made during the overnight session.

This followed a sharp selloff in US tech stocks, triggered by investor concerns over the competitive threat posed by China’s newly unveiled AI model, DeepSeek.

Adding to the Greenback’s safe-haven appeal were fresh tariff warnings from Donald Trump, who reiterated his plans to implement 25% tariffs on imports from Mexico and Canada.

However, USD gains were tempered by disappointing durable goods orders data, which revealed an order growth unexpectedly contracted for a second consecutive month in December.

Pound (GBP) Weakens Amid Deteriorating Risk Sentiment

The Pound (GBP) struggled to hold its ground on Tuesday as market-wide risk aversion weighed on Sterling.

Compounding these pressures were downward revisions to the UK’s growth outlook by Morgan Stanley.

The investment bank downgraded its forecast for 2025 UK GDP growth from 1.3% to just 0.9%.

This projection significantly lags behind the Bank of England’s (BoE) estimate of 1.5% growth, fuelling speculation that the BoE may pivot toward a looser monetary policy if upcoming data aligns with Morgan Stanley’s forecast.

GBP/USD Forecast: Fed Rate Decision to Drive the US Dollar Higher?

Looking ahead, the Pound US Dollar exchange rate could face significant volatility on Wednesday as the Federal Reserve announces its latest interest rate decision.

While the Fed is expected to keep rates steady this month, its forward guidance will be key.

Should policymakers adopt a hawkish stance and suggest no imminent plans to resume rate cuts, the US Dollar could see a sharp boost.

Meanwhile, attention will also turn to Bank of England Governor Andrew Bailey’s testimony before the Treasury Select Committee. Any indication that a February rate cut is under consideration may weigh further on the Pound.

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The EURJPY pair still affected by the domination of the sideways bias by fluctuating within the sideways track represented by 161.60 support and 163.25 resistance.

Note that stochastic continuous negative momentum might push the price to attack the current support, while breaking it will push the price to form new negative trades to target 160.90 and 160.20 levels.

The expected trading range for today is between 161.65 and 163,25

Trend forecast: Neutral

Ethereum price (ETHUSD) bounced bearishly after testing 3222.00$ level in the previous sessions, to reach the key support 3017.30$, noticing that the price attempts to recover and build new bullish wave, motivated by stochastic current positivity.

Until now, our neutrality still valid until the price confirms surpassing one of the above mentioned levels, noting that breaking the mentioned support will put the price under additional negative pressure that targets 2765.00$ areas on the near-term basis, while breaching the resistance will motivate the price to build new bullish wave that its first main target located at 3425.50$.

The expected trading range for today is between 2970.00$ support and 3260.00$ resistance.

Trend forecast: Neutral

Platinum price repeated the negative closings below 955.00$ barrier, hinting its surrender to the continuous domination of the correctional bearish bias by consolidating near 940.00$.

Also, stochastic continuous negative momentum assists to provide more negative trades until reaching the additional support at 920.00$, while breaching the barrier and holding above it will push the price back to the bullish track to expect achieving many gains by rallying towards 972.00$ followed by reaching 983.00$.

The expected trading range for today is between 920.00$ and 955.00$

Trend forecast: Bearish

• The US dollar rebounded on Tuesday as market focus shifted to looming tariffs.
• The Fed will meet on Wednesday and likely keep interest rates unchanged.
• Market participants are pricing an 87% chance of a BoE rate cut next week.

The GBP/USD price analysis shows a pause in the previous session’s decline as caution sets in ahead of the FOMC policy meeting. Meanwhile, market participants watch US political developments for clues on Trump’s tariffs. 

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In the previous session, the greenback recovered as the AI turmoil on Monday eased. The US dollar had collapsed amid fears of the impact of a new low-cost AI model in China. This caused a rush to safe-haven assets other than the dollar. 

However, the US currency rebounded on Tuesday as market focus shifted to looming tariffs. At the start of the week, Trump announced duties on specific goods like steel. At the same time, his Treasury secretary has shown support for a universal tariff that will increase monthly. Tariffs on imported goods will shift demand to locally produced goods, boosting the US economy. Increased demand will also likely increase inflation, putting pressure on the Fed to keep interest rates high. 

The US Central Bank will meet on Wednesday and likely keep interest rates unchanged. Moreover, policymakers may remain cautious as they await more clarity on tariffs. Meanwhile, market participants are pricing an 87% chance of a rate cut when the Bank of England meets next week, supporting a bearish outlook.

GBP/USD key events today

• BOE Gov Bailey Speaks
• Federal Funds Rate
• FOMC Statement
• FOMC Press Conference

GBP/USD technical price analysis: Bulls aim for the 1.2550 resistance level

On the technical side, the GBP/USD price is bouncing higher after meeting the 1.2425 support level. Moreover, it trades above the 30-SMA with the RSI above 50, supporting a bullish bias. Since the trend reversed at the bottom of the chart, bulls have maintained a steep rally, keeping the price above the 30-SMA. At the same time, the price has made higher highs and higher lows.

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The most recent peak paused to allow bulls to rest as the SMA caught up. If bullish momentum remains strong, the price will rally to the 1.2550 resistance level, making a higher high. A break above this resistance would solidify the bullish bias. On the other hand, a break below the 30-SMA would indicate a bearish shift in sentiment, leading to a likely reversal.

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Ripple’s currency price (XRPUSD) rose in the intraday levels, after leaning on the support of the 50-day SMA, lending the price positive momentum, and turning early losses into gains, while leaning on the upward secondary trend line in the short term, with positive signals from the RSI after reaching oversold levels compared to the price’s movements, hinting at positive divergence. 

Therefore we expect more gains for the price, targeting the pivotal resistance of $3.3999, provided the support of $2.5073 holds on.

Trend forecast for today: Bullish 

Created on January 28, 2025

• The EUR/USD currency pair is attempting to maintain its recent upward rebound gains, which recently reached the resistance level of 1.0533, the pair’s highest level in a month, before settling around 1.0490 at the time of writing this analysis.
• It is awaiting important US and European events that will determine the fate of the Euro-Dollar in the coming days.
• The euro is engaged in a short-term recovery against the dollar, and further gains are possible. Obviously, central bank decisions in both Europe and the United States constitute the most prominent risks in this week’s trading.

The US Dollar Declines Amid a Shift in Trump’s Policies

According to recent forex market trading, the US dollar declined to record its weakest performance in more than a year last week, as investors reduced their expectations for imposing comprehensive tariffs on US imports, which markets considered the most positive policy that Donald Trump could implement. Overall, Trump’s victory in November accelerated the rise of the US dollar index, as investors considered such a scenario. After a week in office, traders are increasingly certain that the comprehensive tariffs will not be implemented.

Instead, it became clear that US tariffs would be used as part of a geopolitical bargaining tool, allowing for negotiations and avoiding the worst outcomes from a trade perspective. In this regard, the transactional approach to tariffs was revealed on Sunday when Trump threatened Colombia with a 50% tariff on imports after refusing to allow a deportation flight to Colombia to land. The Colombian government quickly abandoned its position, and tariffs are now out of the picture.

As for the Eurozone, it appears that Trump will drop the tariff threat if European countries commit to buying more US oil and gas. That is not a huge hurdle to overcome for a region that is almost entirely devoid of its own oil and gas production. The developments therefore reduce the chances of reaching parity between the Euro and the US Dollar, although it should be noted that the downward exchange rate trend remains intact from a multi-week perspective and we may just see a pullback in the overbought US Dollar.

Meanwhile, resuming selling remains a high-risk outcome for the first half of 2025.

Trading Tips:

The Euro-Dollar will remain in its current range until the reaction to the central bank announcements this week and the signals coming from the US administration’s policies, so always be careful and do not take risks.

All eyes are on the US Federal Reserve

This week, the US Federal Reserve meeting comes amid Trump’s speech in Davos where he explicitly called for a cut in US interest rates, confirming that the Federal Reserve will face a more interventionist White House. As is known, the US Federal Reserve is independent, but verbal pressure from the executive branch could lead to 50-50 wrong decisions on the dovish side, i.e. more cuts than would have been the case previously. This is negative for the US Dollar against other major currencies.

The expectations are that the Federal Reserve will leave US interest rates unchanged, saying that more time is needed to reflect on the strong nature of the US economy and the impact of previous interest rate cuts. Concurrently, the market is pricing in just one cut this year A rate cut is essential to boost growth in the eurozone economy. Moreover, inflationary pressures remain stubbornly above the European Central Bank’s 2.0% target.

The ECB will therefore welcome last week’s unexpectedly higher-than-expected PMI reading, which suggested that the eurozone’s economic data pulse has bottomed out. This should allow the ECB to express some optimism and respond to calls for an acceleration in the pace of cuts, which could boost the euro exchange rate.

Furthermore, this could allow the EUR/USD pair to recover above the 1.05 resistance for a while.

EUR/USD Technical Analysis Today:

The EUR/USD exchange rate is trading at 1.0490 after last week’s 2.20% gain, its biggest weekly advance since July 2023. The advanced technical setup suggests that the euro has broken the downtrend line that defined the September-January sell-off, which could increase confidence in a short-term interim bottom. Now, EUR/USD has moved above its nine-day exponential moving average (EMA) as the bounce grows, confirming bullish momentum on the multi-day forecast horizon. However, the advance late last week means that the spot has deviated quite far from the nine-day EMA (currently at 1.0408), suggesting some neutrality towards this level is likely in the next couple of days.

EUR/USD is expected to hold between 1.0409 and 1.05 in the first part of the week, with a break higher in the latter part of the week likely to send it higher towards the near-term target of 1.0570. This level represents the 38.2% Fibonacci retracement of the September and January selloffs. Overall, this gain will depend on what the US Federal Reserve says about interest rate expectations at its policy meeting tomorrow, Wednesday, and what the European Central Bank says and does on Thursday. Furthermore, Donald Trump’s ongoing efforts to shape America and the world order in his image will overshadow the risks of the two central bank events. Ultimately, expect more tariff threats and musings from the US President to provide volatility in the near term.

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