• Trump emphasized his plans to impose tariffs on Canada and Mexico.

• The US economy grew by 2.3%, compared to estimates of 2.7%.

• The yen is set to end the week with an over 1.5% gain.

The USD/JPY price analysis indicates an increasing likelihood of a 25% US tariff on goods from Mexico and Canada, supporting the dollar. Meanwhile, the yen eased at the end of a strong week as BoJ remarks weighed.

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The dollar rebounded Thursday as US President Donald Trump emphasized his plans to impose tariffs on Canada and Mexico. Market participants have remained cautious, anticipating the proposed Trump tariffs. If they come on February 1 as promised, it will open the door for more tariffs, boosting the US currency. These tariffs will discourage trade between these countries and likely cause tensions. However, production and demand for US goods will increase, boosting the economy.

Meanwhile, traders also focused on US data, which showed a smaller-than-expected economic expansion. According to the report, the economy grew by 2.3%, compared to estimates of 2.7%. However, the report also revealed a significant increase in consumer spending. 

Meanwhile, the Bank of Japan chief said on Friday that the central bank must keep rates low to allow underlying inflation to increase. His remarks led to a retreat in the yen. However, Japan’s currency is set to end the week with an over 1.5% gain. The yen has soared since the BoJ increased borrowing costs last Friday.

USD/JPY key events today

• Core PCE Price Index m/m
• Employment Cost Index q/q

USD/JPY technical price analysis: Bulls challenge the 30-SMA resistance

On the technical side, the USD/JPY price has rebounded after failing to break below the 154.01 support level. However, the price still trades below the 30-SMA, showing bears are in the lead. Additionally, the RSI favors bearish momentum below 50. 

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Currently, the price is retesting the 30-SMA resistance. If it holds firm, USD/JPY will return to the 154.01 support. A break below this level will confirm a continuation of the downtrend. On the other hand, if bullish momentum surges past the 30-SMA, the price will likely retest the 156.51 resistance level. Moreover, the break would signal a shift in sentiment to bullish. 

Meanwhile, to confirm a new bullish trend, the price would have to break past the 156.51 resistance and start making higher highs and lows.

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The EURGBP price formed some correctional negative waves recently, achieving the target mentioned in our previous report by reaching 0.8355 to test the major support line that appears on the chart.

Now, stochastic exit from the oversold areas will motivate the price to form bullish waves to expect targeting 0.8400 followed by 0.8435 levels soon, while breaking the current support will confirm postponing the positivity to force the price to suffer additional losses by crawling towards 0.8345 before any attempt to achieve the previously mentioned gains.

The expected trading range for today is between 0.8350 and 0.8400

Trend forecast: Bullish

The GBPJPY pair faced strong negative pressures yesterday to notice crawling below 191.90 level and suffering some losses by touching 191.15 level, while the current positive rebound won’t allow the price to regain the bullish track due to the MA55 consolidation near 50% Fibonacci correction level at 194.10, to confirm confining trades within the negative track for the near-term trades.

Also, stochastic crawl below 50 level will increase the negative pressures to expect suffering additional losses by crawling towards 190.60 followed by reaching the next support at 189.50.

The expected trading range for today is between 190.60 and 192.60

Trend forecast: Bearish

The EURGBP price formed some correctional negative waves recently, achieving the target mentioned in our previous report by reaching 0.8355 to test the major support line that appears on the chart.

Now, stochastic exit from the oversold areas will motivate the price to form bullish waves to expect targeting 0.8400 followed by 0.8435 levels soon, while breaking the current support will confirm postponing the positivity to force the price to suffer additional losses by crawling towards 0.8345 before any attempt to achieve the previously mentioned gains.

The expected trading range for today is between 0.8350 and 0.8400

Trend forecast: Bullish

• GBP/USD trades near 1.2400 in the European session on Friday.
• The technical outlook highlights a buildup of bearish momentum.
• The pair could face next support at 1.2370.

GBP/USD struggles to hold its ground and retreats toward 1.2400 after closing in negative territory on Thursday. The pair’s technical outlook suggests that sellers could look to retain control in the near term.

The US Dollar (USD) struggled to gather following mixed macroeconomic data releases on Thursday. Later in the American session, however, the cautious market stance didn’t allow GBP/USD to edge higher.

The US Bureau of Economic Analysis (BEA) reported on Thursday that the US’ Gross Domestic Product grew at an annual rate of 2.3% in the fourth quarter, below the 3.1% expansion recorded in the third quarter and the market estimate of 2.6%. Other data from the US showed that weekly Initial Jobless Claims in the US declined to 207,000 in the week ending January 25 from 223,000 in the previous week. 

Meanwhile, US President Donald Trump reiterated late Thursday that the US is set to impose a flat 25% import tax “because of fentanyl” on all goods crossing the border into the US from Canada or Mexico. 

In the second half of the day, the BEA will publish Personal Consumption Expenditures (PCE) Price Index data for December. On a monthly basis, the core PCE Price Index is expected to rise 0.2%. A reading of 0.3%, or higher, could lift the USD and force GBP/USD to push lower heading into the weekend.

GBP/USD Technical Analysis

GBP/USD stays below the 200-period SMA and the Fibonacci 50% retracement of the latest downtrend, currently located in the 1.2440-1.2420 area, and the Relative Strength Index (RSI) indicator on the four-hour chart drops toward 40, reflecting a buildup of bearish momentum.

On the downside, 1.2400 (static level, round level) could be seen as immediate support before 1.2370 (Fibonacci 38.2% retracement) and 1.2315 (100-period SMA). Looking north, resistances align at 1.2420-1.2440, 1.2500 (round level, static level) and 1.2530 (Fibonacci 61.8% retracement).

The EURUSD price trades negatively since yesterday, and by taking a deeper look at the chart, we find that the price formed head and shoulders’ pattern that its confirmation line located at the current areas around 1.0385$, thus, breaking this level will push the price to continue the decline and achieve our negative targets that start at 1.0325$ and extend to 1.0220$ after breaking the previous level.

Therefore, we will continue to suggest the bearish trend for the upcoming period, taking into consideration that breaching 1.0455$ will stop the expected decline and lead the price to achieve bullish correction on the intraday and short-term basis.

The expected trading range for today is between 1.0300$ support and 1.0455$ resistance

Trend forecast: Bearish

Created on January 31, 2025

• The euro has gone back and forth pretty significantly during the trading session on Thursday, as we have seen a lot of noise, mainly due to the idea of the ECB out there cutting rates.
• The noise around the press conference kind of left people wondering if they are really going to continue to cut or are they in a wait and see mode? And they may very well be in a wait and see mode.

One thing is for sure, the Jerome Powell press conference the previous day did not help this situation. So, I think we’re settling into a trading range in between the 1.05 level and the 1.03 level below. All things being equal, this is a market that I prefer to be short of instead of long, but I also recognize that it’s not always going to be moving. And right now, it’s just not moving. It’s a lot of back and forth Brownian motion.

Looking to Fade this Market on Rallies

I like the idea of fading a short-term rally anywhere near the 1.05 level that shows signs of exhaustion and that resistance extends all the way to the 1.06 level. If we were to break down below the 1.03 level, then it opens up the possibility of 1.02 and then maybe even lower than that down to the parity level, which I do think we get to sooner or later, because despite the fact that the Fed really didn’t do much, there is a very real world in which the Federal Reserve does not cut interest rates at all in 2025. At this point in time, I think it’s going to come down to European data, but for what it’s worth, the advanced GDP numbers in the United States came in cooler than anticipated. So that’s part of the confusion as well.

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• GBP/USD extends sideways action near 1.2450, remains directionless on Thursday.
• The Fed left the monetary policy settings unchanged, as anticipated.
• The US BEA will publish the first estimate of the fourth-quarter GDP data.

GBP/USD struggles to find direction and fluctuates in a tight band at around 1.2450 after closing virtually unchanged on Wednesday. The Federal Reserve’s (Fed) monetary policy announcements fail to influence the US Dollar’s (USD) valuation in a noticeable way as market focus shifts to US growth data.

The Fed said late Wednesday that it left the policy rate unchanged at 4.25%-4.5%. In the policy statement, the Fed removed the language suggesting inflation had “made progress” toward its 2% target and said the pace of price increases “remains elevated” instead.

In the post-meeting press conference, Fed Chairman Jerome Powell acknowledged that there was elevated uncertainty because of significant policy shifts. “We don’t need to be in a hurry to make any adjustments,” he repeated. Although the USD edged higher with the immediate reaction, it struggled to preserve its strength as the Fed event offered little to nothing new on the rate outlook.

On Thursday, the US Bureau of Economic Analysis (BEA) will release its first estimate of the fourth-quarter Gross Domestic Product (GDP) data. Investors expect the US economy to grow at an annualized rate of 2.6% following the 3.1% growth recorded in the third quarter. A weaker-than-forecast print could weigh on the USD and help GBP/USD gain traction. On the flip side, a GDP print at or above the market consensus could force GBP/USD to stay on the back foot.

GBP/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart holds slightly above 50 but moves sideways, suggesting that the bullish bias remains intact, while lacking momentum. 

GBP/USD was last seen trading at around 1.2450, where the Fibonacci 50% retracement level of the latest downtrend and the 200-period Simple Moving Average (SMA) align. In case GBP/USD confirms 1.2450 as resistance, 1.2400 (static level, round level) could be seen as next support before 1.2370 (Fibonacci 38.2% retracement) and 1.2310 (100-period SMA). Looking north, resistances could be spotted at 1.2500 (round level, static level) and 1.2530 (Fibonacci 61.8% retracement).

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January 30, 2025 – Written by Tim Boyer

STORY LINK Pound to Euro Forecast Today: GBP/EUR Steady Ahead of ECB

The Pound Sterling (GBP) held firm near its recent highs against the Euro (EUR) on Wednesday morning, with investors adopting a wait-and-see approach ahead of key events later this week.

At the time of writing, Pound Euro (GBP/EUR) exchange rate was trading at approximately €1.1937, showing little movement from Wednesday’s opening levels.

The Euro (EUR) remained flat on Wednesday as market participants refrained from making any aggressive bets ahead of the European Central Bank’s (ECB) latest interest rate decision.

The ECB is widely expected to cut interest rates by 25 basis points when it concludes its first policy meeting of 2025 on Thursday.

While the rate cut itself appears largely priced in, the Euro’s performance will likely hinge on the bank’s forward guidance.

Should ECB officials hint at further monetary easing in the months ahead, the single currency could face additional downside pressure.

Conversely, if policymakers suggest that they would prefer to hold off from further cuts for now, it may help stem losses in EUR exchange rates.

All eyes will be on ECB President Christine Lagarde’s comments, with investors seeking clarity on the central bank’s assessment of the Eurozone economy and its resilience amid ongoing global trade tensions.

The Pound (GBP) traded in a narrow range on Wednesday as UK Chancellor Rachel Reeves outlined her ambitious plans for boosting economic growth.

In her latest speech, Reeves unveiled proposals to establish a high-tech hub between Oxford and Cambridge, dubbed ‘Europe’s Silicon Valley,’ alongside renewed government backing for Heathrow’s third runway.

The government estimates these initiatives could contribute £78bn to the UK economy over the next decade.

However, Sterling’s reaction has been muted, with businesses seeming unconvinced as they still face the increased tax burden of Reeves’s previous Budget.

GBP/EUR Exchange Rate Forecast: Eurozone GDP Weakness to Weigh on the Euro?

The ECB’s policy decision is expected to dominate the movement in the Pound to Euro exchange rate on Thursday.

However, before the ECB announcement, the Euro could come under pressure from the Eurozone’s fourth-quarter GDP figures.

Economists predict growth slowed sharply, dropping from 0.4% to just 0.1%. Signs of a stalling Eurozone economy could amplify expectations for extended ECB easing, potentially dragging the Euro lower.

Meanwhile, the absence of major UK economic data through the second half of the week may leave the Pound’s movements tied to broader market sentiment.

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