• Overall, the EUR/GBP consolidates sideways with no clear trend.
• RSI suggests rising selling pressure, while MACD indicates declining buying pressure in the short term.
• Bulls failed to defend the 20-day SMA which wornsed the outlook

The EUR/GBP pair trades around 0.8380, consolidating sideways and displaying no clear trend. In addition, the cross lost the 20-day Simple Moving Average (SMA) which might a downwards leg.

The technical indicators present that the bulls are backing off. The Relative Strength Index (RSI) is at 46 in negative territory and declining, indicating rising selling pressure. The Moving Average Convergence Divergence (MACD) presents a decreasing green histogram, suggesting declining buying pressure.

Bullish pressure can prevail if the price can break through the resistance level of 0.8400 and firmly hold above the 20-day Simple Moving Average (SMA). If that happens, the EUR/GBP pair could rise to 0.8450 or even 0.8500. On the other hand, a decline below the support level of 0.8320 could lead to further declines below 0.8300.

EUR/GBP daily chart

• Traders are still digesting last week’s events 

• BoE Governor Andrew Bailey said the central bank might pivot to aggressive cuts.

• The US NFP report revealed an unexpected 254,000 new jobs in September.

The GBP/USD forecast shows a period of consolidation after the recent slide to new lows. The pound remained weak after dovish BoE remarks last week. On the other hand, the dollar paused, holding on to gains made after an upbeat US NFP report. 

–Are you interested to learn more about day trading brokers? Check our detailed guide-

Market participants were calm on Wednesday as prices paused in a slow start to the week. Consequently, traders were still digesting last week’s events, which pressured the pound and boosted the dollar. 

Last week, economic data and policymaker remarks pointed to an aggressive BoE and a gradual Fed. Bank of England Governor Andrew Bailey said the central bank might pivot to aggressive cuts depending on future inflation figures. 

Meanwhile, most US economic reports last week showed a resilient economy. The biggest catalyst came on Friday when the NFP report revealed an unexpected 254,000 new jobs in September. Moreover, the unemployment rate eased to 4.1%. Consequently, market participants slashed bets for a November rate cut, with futures suggesting a 25-bps rate cut. The dollar rallied to a seven-week high, weighing on its peers like the pound.

This week, the UK and the US will release more economic data that will continue shaping the outlook for rate cuts. Notably, traders will watch the UK GDP report on Friday, highlighting growth. Weaker-than-expected growth could put more pressure on the BoE to cut rates. Meanwhile, in the US, the FOMC minutes and the CPI report might contain clues on the Fed’s next policy moves.

GBP/USD key events today

GBP/USD technical forecast: Bears show exhaustion after sharp decline

On the technical side, the GBP/USD price is in a tight consolidation, slightly above the 1.3051 support level. Meanwhile, the bearish bias remains intact, with the price below the SMA and the RSI below 50. After a sharp drop, the price has paused. 

-Are you looking for the best AI Trading Brokers? Check our detailed guide-

However, the RSI is making higher highs, indicating exhaustion in the downtrend. If bears have weakened, they might fail to breach the 1.3051 support. Moreover, bulls might reverse the trend by breaking above the SMA. Nevertheless, if bears are taking a short break, the price might soon start making lower lows.

Looking to trade forex now? Invest at eToro!

67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

Created on October 09, 2024

• The Japanese yen remained weak at around 148.55 yen per US dollar on Wednesday after falling to its lowest level in seven weeks in the previous session, as investors continued to assess the Bank of Japan’s monetary policy outlook.
• In its latest quarterly report, the BoJ said that price and wage increases are spreading across Japan, but acknowledged concerns among small and medium-sized enterprises about declining margins.

At the same time, economic data showed that real wages in Japan fell by 0.6% in August after two months of increases, while household spending declined by 1.9%. recently, the yen has come under pressure after new Japanese Prime Minister Shigeru Ishiba and Economy Minister Ryusei Akizawa called for caution before raising interest rates further under current economic conditions.

Meanwhile, the US dollar received additional support from a stronger-than-expected US jobs report on Friday, which prompted markets to discount any chances of another 50-basis point rate cut by the Federal Reserve in November.

Elsewhere, Japan’s 10-year yields hover near a two-month high. According to trade, the yield on the 10-year Japanese government bond settled at around 0.92% on Tuesday, hovering near a two-month high and tracking a rise in US Treasury yields as investors recalibrated expectations for a rate cut by the Federal Reserve after the stronger-than-expected US jobs report in September. Now, financial markets see an 87% chance that the Fed will opt for a more modest 25 basis point cut in November, while discounting any chances of another half-percentage point cut.

Domestically, the Bank of Japan said in its latest quarterly report that rising prices and wages were spreading across Japan, but acknowledged concerns among small and medium-sized companies about falling margins. Meanwhile, data showed that real wages in Japan fell 0.6% in August after two months of increases, while household spending fell 1.9%.

According to the economic calendar, Japan’s services sector sentiment declined from a 5-month high. As announced, Japan’s services sector index fell to 47.8 in September 2024 from a five-month high of 49.0 in the previous month, but exceeded market expectations of 47.5. This represents the first decline in four months, driven by a decline in the services industry. In contrast, the food and beverage industry showed positive growth.

Meanwhile, the employment index rose. In addition, the business sentiment gauge accelerated, driven by an increase in the manufacturing industry. For now, the economic expectations index fell to 49.7 after hitting a five-month high of 50.3 in August, marking weakness for the first time since May, as the economy continues to show a gradual recovery amid the impact of price pressures.

According to stock trading platforms, US futures flat after market rebound. US stock futures were little changed on Wednesday after a tech-led rally on Wall Street in the previous session. In regular trading on Tuesday, the S&P 500 and the Nasdaq Composite jumped 0.97% and 1.45%, respectively, while the Dow Jones Industrial Average rose 0.3%. Nine of the 11 sectors in the S&P 500 ended higher, led by technology, telecommunications services and consumer discretionary stocks. Tech giants such as Nvidia (4.1%), Apple (1.8%) and Meta Platforms (1.4%) were notable performers. Meanwhile, energy and materials stocks, including Exxon Mobil (-2.7%), Chevron (-1.6%) and Southern Copper (-3.8%), were lower. Moreover, the moves came after a strong jobs report last week raised hopes for a soft landing by the Federal Reserve. Also, investors reacted to the sharp drop in crude oil prices, while the US 10-year yield remained above 4%.

However, investors expect more volatility in the run-up to the US presidential election. Now, financial markets are looking ahead to the latest Federal Reserve minutes and major banks’ earnings.

USD/JPY Technical Analysis and Expectations Today:

Based on the daily chart attached, the USD/JPY pair is in an upward channel that has recently formed and will strengthen if the pair moves above the psychological resistance level of 150.00. technically, there is a chance for this to happen if the minutes of the latest US Federal Reserve meeting are more hawkish and if US inflation figures come in stronger than expected. Conversely, the bears may find an opportunity to recoup recent losses. Furthermore, the support level of 145.90 is a real threat to the current upward rebound. Ultimately, we still prefer buying USD/JPY from any downward level.

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

• EUR/USD trades in negative territory below 1.1000 on Wednesday.
• The technical outlook remains bearish in the near term.
• The Fed will release the minutes of the September policy meeting later.

After posting small gains on Tuesday, EUR/USD stays on the back foot early Wednesday and trades in negative territory below 1.1000. The minutes of the Federal Reserve’s (Fed) September policy meeting could trigger the next directional move in the pair.

In the absence of high-tier data releases, the positive shift seen in risk mood made it difficult for the US Dollar (USD) to gather strength on Tuesday and helped EUR/USD hold its ground. The sharp decline in Asian stock indices cause investors to adopt a cautious stance early Wednesday, supporting the USD and weighing on the pair. At the time of press, US stock index futures were down between 0.25% and 0.3% on the day, pointing to a bearish opening in Wall Street.

After the September meeting, the Fed decided to lower the policy rate by 50 basis points (bps). Investors will pay close attention to discussions surrounding this decision within the minutes. In case the publication shows that policymakers keep an open mind about opting for large rate cuts in the near future, the immediate market reaction could cause the USD to weaken. According to the CME FedWatch Tool, markets are currently pricing in a 13% probability of the Fed lowering the policy rate by another 50 bps at the November meeting.

Meanwhile, European Central Bank (ECB) policymaker and Slovakian central bank Governor Peter Kazimir said on Wednesday that he is not convinced that they should decide on the policy on the basis of one good inflation figure. This comment, however, failed to support the Euro.

EUR/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart stays in the bearish territory but holds above 30, suggesting that EUR/USD has more room on the downside before turning technically oversold.

On the downside, 1.0950 (static level, Fibonacci 61.8% retracement of the latest uptrend) aligns as first support before 1.0900 (round level) and 1.0870 (Fibonacci 78.6% retracement). In case EUR/USD manages to reclaim 1.1000 (Fibonacci 50% retracement), next resistance could be seen at 1.1050 (Fibonacci 38.2% retracement) ahead of 1.1090-1.1100 (100-period Simple Moving Average (SMA), 200-period SMA, Fibonacci 23.6% retracement).

• GBP/USD stays below 1.3100 following Tuesday’s meager recovery attempt.
• The bearish stance remains unchanged in the near term.
• The minutes of the FOMC’s September meeting will be scrutinized by investors.

GBP/USD managed to post small gains on Tuesday but failed to reclaim 1.3100. The pair stays relatively quiet in the European session on Wednesday as investors wait for the Federal Reserve (Fed) to publish the minutes of the September policy meeting.

The recovery seen in Wall Street’s main indexes made it difficult for the US Dollar (USD) to gather strength during the American trading hours on Tuesday, allowing GBP/USD to cling to modest daily gains.

Early Wednesday, the souring market mood, after a nearly 7% decline recorded in China’s Shanghai Composite Index, caps GBP/USD’s upside. 

The Fed cut the policy rate by 50 basis points (bps) after the September meeting. Investors will scrutinize the FOMC Minutes to see whether policymakers are willing to consider more large rate cuts in the near future.

If the publication shows that officials don’t think that they will need to continue to ease the policy aggressively moving forward, the immediate market reaction could support the USD. Nevertheless, the CME FedWatch Tool shows that markets already price in a nearly 90% probability of the Fed opting for a smaller, 25 bps, rate reduction at the November meeting. Hence, the positive impact of a hawkish FOMC Minutes on the USD could remain short-lived.

GBP/USD Technical Analysis

The Relative Strength Index (RSI) remains in the bearish territory, well below 50, while staying above 30, suggesting that GBP/USD could stretch lower before staging a technical correction.

Immediate support aligns at 1.3050 (static level) before 1.3000 (round level, static level) and 1.2940 (static level). In case GBP/USD manages to clear 1.3100 (Fibonacci 78.6% retracement level of the latest uptrend), it could extend its recovery toward 1.3170 (Fibonacci 61.8% retracement).

Created on October 09, 2024

• The euro attempted to recover a bit during the early hours on Tuesday, as we continue to look for some type of bottom.
• The 1.0950 level has been important multiple times and is essentially an area that I think market memory comes into play.
• It was resistance multiple times this year, and in the past, it’s been support.
• In fact, I would suggest that the market has a zone of support and resistance between the 1.09 level on the bottom and the 1.10 level on the top. And we’re just testing that area to see if the trend can hold as it has many times before in the past.

When you look at the euro, the 1.12 level has offered a significant amount of resistance, and we ended up forming a large double top or M pattern. And therefore, a lot of traders will be looking at this through the prism of whether or not we can break above there. Whether or not that was actually a trend changing double top. If we break down below the 200 day EMA, which is currently just underneath the 1.09 level, then I think that confirms the downtrend. We will probably go looking to the 1.06 level.

On a Big Rally…

If we can rally from here, and especially if we can take out the top of the candlestick from the Friday session, that would negate everything that happened after the jobs report in America, and more likely than not send the euro looking to the 1.12 level above, which of course has been such a headache for buyers. All things being equal, this is a pair that does tend to go back and forth between large round numbers, so pay attention to that as well. Because of this, the market is probably one that you need to look at through the prism of short-term back and forth trading or could also serve as a proxy for the US Dollar Index.

Ready to trade our EUR/USD Forex analysis? We’ve made a list of the best forex demo accounts worth trading with. 

Image © Adobe Images

The big banks have raised their forecasts for the Pound against the Dollar into year-end.

An exclusive analysis of the predictions made by all the major investment banks for year-end 2024 shows the median point has risen by 200 pips since March.

The findings are contained in Corpay’s GBP/USD forecast guide, which is available to readers of Pound Sterling Live as a free discretionary download.

The mean forecast of over 40 investment bank analysts, all of which utilise their own bespoke models, has also risen by 200 pips.

Analysts at even the biggest institutions can get currency predictions wrong, and sometimes by a significant margin.

This is where a survey is useful, as it establishes a consensus forecast based on the mean and median views of all the analysts.

We think this gives the best possible projection for businesses and individuals with significant payment requirements to assess their risk/reward dynamics.

GBP/USD investment bank consensus forecasts: The end-2024 and 2025 guide from Corpay has been released. It shows a sizeable uplift was made to the consensus forecasts for GBP/USD. Please request a copy here.

The survey shows the highest forecast by any single institution remains unchanged, albeit some 700 pips above current levels in the spot.

The lowest forecast has also been lifted, and no single institution now thinks the Pound to Dollar exchange rate will fall below 1.20 in the outlook, as was the case in the second quarter.

The forecast guide also reveals what a select few well-known investment bank names are expecting.

Bank of America Merrill Lynch remains amongst the more bullish, seeing spot headed to 1.35 by the time 2024 ends.

Above: GBP/USD in 2024.

Recently, Bank of America wrote the Pound will remain supported by a slow pace of interest rate cuts at the Bank of England.

“We continue to expect a slow cutting cycle with one more cut in November this year, four cuts in 2025 and two cuts in 2026 such that Bank Rate reaches a terminal rate of 3.25% by mid-2026,” says a note from Bank of America.

The Pound hit fresh 2024 highs against the Dollar in September but has since relinquished the highs, thanks to a reassessment of Federal Reserve interest rate policy.

Investors expect the Fed no longer has a window to cut rates by 50 basis points owing to a strong economy, instead it will have to opt for 25bp moves.

The Pound was meanwhile hampered by comments from the Bank of England’s Governor Andrew Bailey that the Bank could afford to be more “activist” when it comes to cutting interest rates.

“The perception that the BoE may cut interest rates more cautiously than the Fed and potentially the ECB have been a source of support for the pound. This view has been deeply shaken by comments made by BoE Governor Bailey in an interview with the Guardian newspaper,” says Jane Foley, Senior FX Strategist at Rabobank.

The next major event for the Sterling is the release of September’s inflation numbers in mid-October. This will determine whether the Bank cuts again in early November or waits until December.

Rising consumer spending and inflation could increase expectations of a Q4 2024 Bank of Japan rate hike. A more hawkish BoJ rate path may lead to a USD/JPY drop toward 147.5.

BoJ and Interest Rates

Japan’s new prime minister, Shigeru Ishiba, recently poured cold water on expectations of a Q4 2024 BoJ rate hike, saying the country was not ready for further rate hikes. However, the BoJ’s latest regional quarterly report suggested a Q4 2024 rate hike remains possible.

The report showed improvement across all nine regions, although some reported weakness in part. Hokuriku and Tokai reported improving economic recoveries, while Kanto and Kinki, among Japan’s main regional contributors to GDP, reported moderate economic recoveries. A sustained recovery would likely boost expectations of a Q4 2024 BoJ rate hike.

Amidst shifting sentiment toward the BoJ rate path, investors should monitor BoJ Board Member speeches. Their insights could influence demand for the Yen and sentiment toward the BoJ rate path. While the Japanese government may comment on monetary policy, the BoJ remains independent.

Overview of the US Economic Calendar: FOMC Minutes and Fed Speakers in Focus

In the US session, the Fed will be under the spotlight. The FOMC Meeting Minutes from September will draw interest. The minutes will offer insights into the economic outlook and interest rate path, though the recent US Jobs Report could limit the impact on the USD/JPY.

Investors should also monitor FOMC member speeches. FOMC members Thomas Barkin, Austan Goolsbee, Philip Jefferson, and Fed Vice Chair John Williams are on the calendar to speak. Their reactions to the US Jobs Report and views on the timeline for a Fed rate cut could impact US dollar demand. Calls to delay rate cuts may push the USD/JPY toward 150.

• USD/JPY trades at 148.17 after hitting a low of 147.55, supported by buyers returning above the 148.00 level.
• Technical outlook suggests upside potential with resistance at 149.14, followed by 149.39 and 150.00.
• A drop below the Ichimoku Cloud at 146.60-80 could signal further downside for the pair.

The USD/JPY remains virtually unchanged after dropping to a two-day low of 147.55 amid hopes of a ceasefire between Hezbollah and Israel, as stated by Hezbollah’s prominent leader, according to CNN. At the time of writing, the pair trades at 148.17, flat.

USD/JPY Price Forecast: Technical outlook

Although the USD/JPY paused its uptrend, the pair resumed its advance.

The pair hit a weekly low of 147.34, but buyers moving in pushed the exchange rate above the 148.00 psychological figure, opening the door for further upside.

The Relative Strength Index (RSI) shows bulls in charge, even though it shows momentum paused.

For USD/JPY buyers to resume the uptrend, the first resistance will be the October 7 high at 149.14. A breach of the latter will expose the August 15 high of 149.39, followed by the 150.00 figure. Once those areas are surpassed, buyers will eye the 200-day moving average (DMA) at 151.13.

On the flip side, if USD/JPY drops below the Ichimoku Cloud (Kumo) at 146.60-80, this could pave the way for further downside.

USD/JPY Price Action – Daily Chart

Created on October 08, 2024

• According to recent trades, the GBP/USD exchange rate has declined by 2.0% last week and still appears strong, but a limited rebound is possible in the coming days.
• Recently, Sterling losses reached the support level of 1.3060, the lowest in three weeks.
• Furthermore, the decline in the exchange rate comes amid a reassessment of how quickly the Federal Reserve can cut US interest rates in the future, given the strengthening of the US economy.
• Commenting on the performance of the forex market, Francesco Pesole, a forex analyst at ING Bank, said: “The foreign exchange market has undergone a difficult readjustment as the idea of an easy Federal Reserve has now evaporated.

The most important data of the month came on Friday in the form of the US Non-Farm Payrolls report, which showed an unexpected improvement in the employment situation in the United States. 254,000 jobs were created in September, beating expectations of a reading of 147,000. Any hopes of a 50bp rate cut by the US before the end of the year have been dealt a major blow by this data, with investors wondering whether they will succeed in cutting rates by 25bps twice. In fact, a 25bp rate cut by the US is not out of the realm of reality.

Therefore, there has been a significant adjustment in expectations, and with a weekly decline of 2.0% in the rearview mirror, it is possible to buy some dips in the GBP/USD pair. According to reliable trading platforms, the GBP/USD pair has now retreated to its 50-day moving average at 1.3078, which provided support on Friday. Concurrently, this forms a near-term support level to watch this week and some pullback from the strong selling around these levels could occur.

Technical forecasts for the GBP/USD pair today:

Technically, I would caution that any confirmed break below the 50-day moving average at any point in the coming days could represent a more determined breakdown underway that could risk turning GBP/USD from a medium-term uptrend to a downtrend. Downside risks also come in the form of ongoing geopolitical concerns cantered around the Middle East. Overall, the GBP/USD rally will be contained below the 2024 highs (1.34) and it will take signs of renewed slowdown in the US economy to drive the next phase of GBP/USD’s rally.

We will not get any chance of the data needed to drive this narrative until later. According to the economic calendar, the US inflation report on Thursday is the highlight of the week, as it will determine how market sentiment evolves in line with expectations of interest rate cuts by the Federal Reserve. Therefore, a reading below expectations would boost hopes that the Federal Reserve will cut interest rates twice more in 2024, which could strengthen the pound sterling against the euro and the US dollar.

For now, the market is looking for a reading of 2.3% on an annual basis and 0.1% monthly. Ultimately, anything higher could push back expectations of interest rate cuts further and could cause the pound sterling to suffer until the end of the week.

Ready to trade our GBP/USD Forex analysis? We’ve made this UK forex brokers list for you to check out.