Created on December 29, 2024

The GBP/USD finished the week near the 1.25700 level, as the lower range of the currency pair continues to see plenty of tests and nervous sentiment appears to be creating headwinds.

Holiday trading in Forex created rather tight ranges for most major currencies last week and the GBP/USD was no exception. The lower elements of the GBP/USD remain the status quo as USD centric strength continue to be exhibited. Financial institutions were open for business before going into the weekend, but volumes were lackluster and trading in Forex this coming week will be relatively quiet too.

The GBP/USD is near important support ratios that are definitely being watched by large financial institutions. The 1.25000 ratio remains an important psychological level which came within sight early and late last week, this until a slight buying surge returned the GBP/USD to a more comfortable looking value and within talking distance of the 1.26000 level. However, the currency pair is certainly facing tests and these will not disappear this coming week.

Speculative Near-Term Considerations for the GBP/USD

Traders who believe the GBP/USD is oversold should be careful. The GBP/USD suffered when the Bank of England was overly cautious on the 19th of December and kept their interest rate in place. The BoE is practicing extreme caution even as the U.K economy is lackluster. The economic picture for the U.K is unlikely to see a vast amount of improvement in the mid-term. Yes, the Bank of England is nervous about inflation, but better fiscal policy would help the inflation fight.

The testing of the 1.25000 level as behavioral sentiment in financial institutions is nervous about Bank of England policy and also fragile because of USD centric strength make for a volatile mid-term to come. President-Trump’s takeover of the U.S White House has been digested, and now attention has turned to U.S Fed policy which is becoming more cautious. If U.S interest rates are not lowered over the mid-term, and the BoE must consider an interest rate cut this sets the stage for more potential weakness in the GBP/USD via financial institutional outlook. Light holiday trading this week will not seek to bet against these mid-term notions. A lack of clarity is not helping.

A New Lower Range for the GBP/USD Mid-Term

After having attained values in September above the 1.34000 level, the GBP/USD looks oversold. However, conditions have changed regarding outlook for the currency pair and they are not about to alter dramatically. Speculators who have bias towards the GBP/USD should make sure they are not betting on notions that have no foundation.

• Looking for a sustained move higher with solid price velocity in the near-term is not likely going to see good result.
• Instead traders of the GPB/USD this coming week should be prepared to see the 1.25100 to 1.25900 range get plenty of price action.
• Volumes may be solid tomorrow, but by early Tuesday Forex will again become very quiet and this will remain the case into Thursday.
• Friday of this week could see some more action as financial institutions position for the opening of the following week when volumes are certain to increase.

GBP/USD Weekly Outlook:

Speculative price range for GBP/USD is 1.25030 to 1.26070

The GBP/USD may appear to be in oversold territory to some speculators, but the price action of the currency pair matches the dynamics of the broad Forex market. Until sentiment begins to stabilize there will be no sudden shifts of momentum upwards for the GBP/USD that are sustained. The lower realms of the GBP/USD getting tested consistently the past week may see another round of these depths emerge.

Support did seem to be fairly strong around the 1..25100 mark with some outliers lower and perhaps this will continue to be the case in the coming days. Traders who want to participate in the GBP/USD like all of Forex this week should not be overly ambitious and be on the lookout for sudden bursts if large trades are transacted in inactive markets. Retail traders are reminded to use entry price points in Forex this coming week because spreads will widen in quiet conditions.

Important DisclaimersThe content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party’s services, and does not assume responsibility for your use of any such third party’s website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.Risk DisclaimersThis website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.

• EUR/USD trades in a tight channel at around 1.0400 on Friday.
• The cautious market mood is likely to cap the pair’s upside.
• The near-term technical outlook points to a lack of directional momentum.

EUR/USD registered marginal gains after returning from the Christmas break on Thursday but failed to gather bullish momentum. Early Friday, the pair trades in a narrow channel at around 1.0400.

The data published by the US Census Bureau showed on Thursday that Initial Jobless Claims edged lower to 219,000 in the week ending December 21 from 220,000 in the previous week. This reading came in better than the market expectation of 224,000 but failed to influence the US Dollar’s (USD) valuation. In the second half of the day, the mixed action seen in Wall Street’s main indexes limited the pair’s upside.

The economic calendar will not offer any high-tier data releases on Friday. Meanwhile, US stock index futures trade in negative territory, reflecting a cautious market stance in the European session. Unless there is a noticeable improvement in risk mood in the American session, the pair could stay on the back foot.

Nevertheless, trading conditions are likely to remain thin, not allowing EUR/USD to make a decisive move in either direction.

EUR/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart stays near 50, highlighting EUR/USD’s indecisiveness. 

First resistance for EUR/USD could be spotted at 1.0430-1.0440 (50-period Simple Moving Average (SMA), static level) before 1.0475, (100-period SMA) and 1.0500 (200-period SMA). On the downside, 1.0350 (static level) and 1.0300 (static level, round level) could be seen as next support levels if the pair flips 1.0400 (static level, round level) into resistance.

Created on December 27, 2024

• The Canadian dollar initially did rally a little bit during the trading session, but it is somewhat stagnant at this point, which makes a certain amount of sense as we are getting close to the crucial 110 yen level.
• The 110 yen level is the beginning of a zone of resistance that extends to the 111.50 yen level.
• So, I think you have to look at this as a process, not necessarily something that just takes off.

Now, having said all of that, the US dollar is beating up on the Japanese yen, and I think that does have a little bit of a knock-on effect, but it’s also worth noting that we are at the 200-day EMA. The stochastic oscillator is starting to crossover in the overbought condition as well, and as this market has been somewhat sideways over the last several months, that could come into play.

Interest Rates Not as Big Here

However, the interest rate differential between most currencies and the Japanese yen is still fairly wide, although it’s probably worth pointing out in Canada, not as much as many of the other majors. The biggest thing that this pair has going for it is the fact that it’s denominated in Japanese yen. I do not like the Canadian dollar at all, but in this case, the Canadian dollar just is a touch stronger than the Japanese yen.

You still get paid swap at the end of every day, assuming that you’re with a reputable broker, but you also have to recognize the fact that there is going to be quite a bit more work to do here than there would be in say the US dollar against the yen or maybe even the pound against the yen. Short-term pullback should be thought of as buying opportunities with a 50 day EMA, probably offering quite a bit of support as well. Furthermore, we also have the 106 yen level that drops down to the 105 yen level offering a large region of support. I’m a buyer, not a seller, but not an avid buyer.

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

Gold (XAU/USD) is trading at $2,633.03, down 0.03%, consolidating above its pivot at $2,631.59. The 50-day EMA at $2,624.82 offers near-term support, while the 200-day EMA at $2,639.07 signals broader consolidation.

Immediate resistance is at $2,651.62, with potential to rise toward $2,676.43. Support lies at $2,608.24, with a break below targeting $2,584.66.

Gold’s outlook remains cautiously optimistic above $2,630, but a breach could trigger bearish momentum.

Important DisclaimersThe content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party’s services, and does not assume responsibility for your use of any such third party’s website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.Risk DisclaimersThis website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.

Created on December 26, 2024

Bullish View

• Buy the GBP/USD pair and set a take-profit at 1.2665.
• Add a stop-loss at 1.2400.
• Timeline: 1-3 days.

Bearish View

• Sell the GBP/USD pair and set a take-profit at 1.2400.
• Add a stop-loss at 1.2665.

The GBP/USD exchange rate remained relatively unchanged this week, as the forex market experienced low volumes due to the Christmas Holiday. It has stalled at 1.2545, a few pips above this month’s low of 1.2478.

The GBP/USD has also stalled because there was no important economic data from the UK and the United States. The only data that came out were Monday’s US consumer confidence and UK GDP numbers.

While these are crucial numbers, their impact on the pair was muted because they came a few days after the Bank of England (BoE) and the Federal Reserve made their final decisions of the year.

The BoE left interest rates at 4.75% as it expressed concerns about the country’s inflation, which rose again in November. However, with the UK economy contracting, there are odds that the bank will cut interest rates several times in 2025.

The Fed, on the other hand, slashed interest rates by 0.25%, bringing the year-to-date cuts to 1% It, however, expressed a more hawkish tone as it hinted that it will deliver just two cuts in 2025. The Fed is highly concerned that Trump’s policies will be highly inflationary.

Some of his most notable policies are mass deportations, tax cuts, which will increase the budget deficit, and tariffs.

The next data to watch on Thursday will be initial and continuing jobless jobs numbers. While these are important numbers, their impact on the Fed and the GBP/USD pair will be muted.

GBP/USD Technical Analysis

The daily chart reveals that The GBP/USD exchange rate has been downtrend in the past few days. It has dropped below the important support at 1.2665, its August lows.

The pair has also moved below the 50-day moving average. Also, oscillators like the MACD and the Relative Strength Index (RSI) have all pointed downwards.

On the other hand, it has formed a double-bottom pattern at 1.2478. A double-bottom often leads to more gains. Therefore, the pair will likely have a brief rebound in the next few days. Such a move will see it rise to the next key resistance level at 1.2665.

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Created on December 26, 2024

• The US dollar initially pulled back just a bit during the trading session on Tuesday, only to turn around and show signs of life.
• At this point, if we can break above the crucial ¥158 level, then it’s likely that we will continue to see a lot of upward momentum, perhaps opening up the possibility of a move to the ¥162 level.
• This is an area that has been important a couple of times, so I think this makes a lot of sense.

Short-term pullbacks at this point in time will continue to see plenty of support, and I think the ¥155 level continues to offer a short-term floor in the market. Interest rate differential favors the US dollar which is something that you should not forget anytime soon, as the US dollar continues to see interest rates climb. Despite what the Fed’s doing, most traders focus on what the Fed says, but what you really need to do is pay attention to what the bond markets do. Now we have pretty high yields in the US, ten-year especially. So that continues to make the US dollar like a wrecking ball against most other currencies, and especially the Japanese yen, which has a whole litany of problems by itself.

Bank of Japan? Not a Factor.

The Bank of Japan recently raised rates a bit. We’ve completely turned around since then, and now it looks like we are going to continue to climb again. A break above the ¥158 level could open up the possibility of a move to the ¥162 level. I have no interest whatsoever in shorting this USD/JPY market, and it’s very possible we may go much higher before it’s all said and done, as the Federal Reserve looks like they will be a little bit more hawkish in 2025 than people had anticipated.

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

Created on December 26, 2024

• The British pound initially did try to rally during the trading session on Tuesday, but gave back gains and we are essentially closing pretty much flat.
• It does make a certain amount of sense that the market would do very little as we are facing a cluster of resistance.
• This is an area that I think would continue to be a massive barrier and headache unless we get a lot of yen selling across the board.

The fact that the liquidity wouldn’t have been there comes into play as well. That being said, despite the fact that the British pound isn’t necessarily a currency I love, it’s not the worst one out there. And the worst one out there might actually be the Japanese yen, maybe the Swiss franc. It’s kind of a tossup at this point. You could even throw the euro into that group.

Big Support Level Under Here

So, I do think then if we get a little bit of a pullback, it’s probably worth paying close attention to the ¥195 level, which is an area that’s a large round, psychologically significant figure, an area that’s seen some market action previously. And an area that the 50 day EMA is rapidly approaching. If it can break above the ¥195 level, then the short term technical flaw will just simply move up with that 50 day EMA.

On the upside, we have the ¥200 level, which has been like a brick wall for the British pound. But if and when we finally break above there, it’s likely that we would see this GBP/JPY pair really start to take off to the upside, perhaps driving the British pound all the way up to the ¥208 level, which of course was the recent swing high. I have no interest in buying the yen, which means I have no interest in shorting this pair.

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

Pound Sterling consolidates against USD in holiday-curtailed week

The Pound Sterling (GBP) trades sideways above the psychological support of 1.2500 against the US Dollar (USD) in Tuesday’s London session. The GBP/USD pair consolidates as trading volume is low amid a holiday-shortened week due to Christmas Eve and Boxing Day on Wednesday and Thursday, respectively.

The US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, also trades sideways around 108.15. Read more…

GBP/USD Forecast: Pound Sterling stays directionless below 1.2550

GBP/USD moves sideways in a tight range below 1.2550 in the European morning on Tuesday after posting small losses on Monday. The pair is likely to have a hard time finding direction in the near term, with trading conditions remaining thin heading into the Christmas holiday.

The US Dollar held its ground on Monday but struggled to gather strength following mixed macroeconomic data releases from the US. Read more…