• The GBP/USD forecast edges higher as UK employment data relieves pressure.
• The BoE’s potential rate cut expectations limit the upside pressure.
• UK PMI and US NFP data are key to watch for fresh impetus.

GBP/USD traded modestly up as fresh UK labor data showed easing strain in the jobs market. The ILO unemployment rate rose to 5.1% in the three months to October, up from 5.0% previously. The reading met expectations but confirmed a gradual loss of momentum in employment conditions.

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Meanwhile, claimant counts increased by 20,100 in November, reversing October’s revised decline. Employment change remained negative, with payrolls down by 17,000 in October. While the pace of job losses slowed, the trend still points to weaker labor demand.

Wage growth stayed elevated but showed early signs of cooling. Average earnings excluding bonuses rose 4.6% YoY, slightly below the prior reading. Earnings including bonuses increased 4.7%, beating forecasts but still lower than earlier levels. Pay growth remains well above inflation, yet the direction no longer supports further policy tightening.

Hence, these figures reinforce expectations that the Bank of England will cut rates at its upcoming meeting. Markets now view a policy move as likely, limiting upside pressure on sterling. Traders remain cautious ahead of the decision, especially with recent data failing to justify a hawkish stance.

Attention is now shifting to incoming UK PMI data, which may offer clues on business activity and hiring trends. Still, central bank guidance remains the dominant driver for the pound in the near term.

On the US side, the dollar continues to trade under pressure due to uncertainty around Fed policy. Markets expect deeper rate cuts in 2026 than the Fed has signaled. This gap leaves the dollar vulnerable to sudden repricing.

The upcoming US Non-Farm Payrolls report will play a key role. It will include two months of data and comes after disruptions from a government shutdown. Forecasts point to modest job growth in November, though risks lean to the downside following weak private payroll figures.

Investors will focus less on the unemployment rate and more on payroll gains and wage growth. Average hourly earnings remain the clearest signal for inflation risk and future Fed decisions.

GBP/USD Technical Forecast: Buyers Eying 1.3440

The GBP/USD chart shows a modest rebound from the 1.3350 demand zone, coinciding with the 50-period MA, surging above the 20-period MA near 1.3380. Now the pair is eying the resistance at recent swing high near 1.3440 as the RSI climbs well above the 50.0 level.

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On the flip side, any dip below the 1.3350 confluence could alter the pound’s bullish outlook. The pair could dip further down to 1.3300 round number ahead of 100-period MA support at 1.3280.

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STORY LINK Pound Sterling to Dollar Forecast: GBP/USD Supported by Dovish Fed Expectations

The Pound to US Dollar exchange rate (GBP/USD) edged higher at the start of the week, buoyed by an improvement in overall market sentiment which lent support to the pairing.

At the time of writing, GBP/USD was trading around $1.3381, up roughly 0.2% from its opening levels during the European session.

The US Dollar (USD) opened the week on the back foot as a brighter market mood reduced demand for the safe-haven ‘Greenback’.

Improved risk appetite followed growing optimism that global borrowing costs could fall further in 2026, with several major central banks expected to deliver additional interest rate cuts.

The Federal Reserve remains a focal point after trimming rates last week and striking a notably dovish tone. Expectations that US policymakers are now firmly on an easing path helped lift broader sentiment while simultaneously weighing on the Dollar.

USD demand was also muted ahead of key US labour market data later in the week, with investors wary that further signs of cooling employment could reinforce bets on additional Fed rate cuts.

The Pound (GBP) found modest support on Monday despite a lack of clear domestic catalysts.

Against the US Dollar, the increasingly risk-sensitive Pound benefited from improved global sentiment, which reduced demand for traditional safe-haven currencies.

Sterling also advanced against several higher-risk peers, even as UK economic data remained sparse and offered little in the way of direction.

GBP/USD Exchange Rate Forecast: UK and US Jobs Reports Take Centre Stage

Looking ahead, GBP/USD volatility may increase as fresh labour market data from both the UK and the US comes into focus.

The UK’s latest employment report could act as a headwind for Sterling. Forecasts suggest unemployment rose to 5.1% in the three months to October — the highest level since early 2021 — while wage growth is expected to have softened. Evidence of a cooling labour market would likely strengthen expectations that the Bank of England (BoE) will deliver multiple rate cuts in 2026.

Preliminary UK PMI figures for December are also due, though with activity expected to remain subdued, they may offer limited support for the Pound.

For the US Dollar, attention will centre on incoming labour data, including delayed non-farm payrolls reports for October and November. Any signs of weakening employment conditions could pressure USD further by reinforcing expectations of continued Federal Reserve easing.

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Image © Pound Sterling Live

Pound Sterling was unable to build a meaningful recovery, and risks are tilted lower this week, in which the Bank of England (BoE) dominates.

Our stance this December was that the pound to euro exchange rate (GBP/EUR) would deliver a year-end rally, offering euro buyers some tactical buying opportunities.

However, the euro has proven to be an outperformer amongst the world’s major currencies over the course of the past week, stymying GBP/EUR’s ambitions.

The pair peaked at 1.1463 last Tuesday and we were confident upside momentum was building as it had crossed the 55-day exponential moving average (EMA); typically a sign that an uptrend is building.

However, last Thursday’s 0.30% drop in GBP/EUR sliced through the 55-day and 21-day EMA, both of which are likely to act as resistance levels in the coming days.

Momentum is turning lower again and we are left considering the possibility that the year-end rally burned out before the mid-month mark.

Above: GBP/EUR at daily intervals.

Losses to 1.1360 are possible this week, ahead of a move back to 1.1320 support early in the new year.

The problem for those wanting a stronger pound is that fundamentals are pitted against it: the economic data has deteriorated, as confirmed by four successive months of no economic growth, and this is raising the odds of further BoE interest rate cuts.

This is unhelpful to sterling, given most G10 central banks have ended their rate cutting cycles and many are expected to raise interest rates at some point next year.

Image courtesy of Lloyds Bank

The BoE is almost certainly set to lower Bank Rate by 25 basis points on Thursday, meaning the decision itself won’t come as a surprise.

Instead, what will be of interest is how the Bank shapes expectations for what happens early next year.

Ahead of the decision, we will receive labour market and PMI data (Tuesday) and inflation numbers (Wednesday).

GBP/EUR Year-End 2025

Built from leading bank forecasts.

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The market is presently priced for one further BoE cut before April 2026, but if the data disappoints, more cuts will be built into the outlook, which would inevitably weigh on the pound.

“A BoE cut combined with the market adding to expectations of another cut in Q1 26 can weigh on the GBP,” says a note from TD Securities.

Economists look for the UK’s unemployment rate to rise to 5.1% when labour market statistics are released Tuesday, confirmation of an ongoing deterioration in the jobs market.

The Bank will believe it can address this by lowering rates, which would take pressure off households and businesses.

In short, if the data undershoots, the pound will sink to 1.1350 and lower.

However, lowering interest rates could prove risky if it stimulates inflation: Wednesday should see the ONS confirm inflation comes in at 3.6%, which is well ahead of the Bank’s 2.0% target.

If the data comes in ahead of expectations, we would expect pricing for further Bank rate cuts to halt and reverse, helping the pound recover.

A series of above-consensus data prints would help pound-euro recover back above 1.14 and restart the year-end rally.

But given the nature of survey data that showed the economy struggled ahead of the November budget, we see this as a lower probability outcome.

Created on December 15, 2025

• The US dollar strengthens against the Japanese yen as interest rate differentials continue to favor the United States.
• With Federal Reserve cuts uncertain and the Bank of Japan constrained, the pair appears supported, favoring dip-buying strategies.

The US dollar has rallied against the Japanese yen during the trading session on Friday as traders start to ask questions about whether or not the Federal Reserve is going to start cutting rapidly, or if it is a situation where they do not. And the FOMC statement, once you read into it and read the transcripts of the FOMC press conference, gives a little bit of hesitation to the idea that the Federal Reserve is just simply on autopilot.

Conversely, on the other side of the Pacific Ocean, we have the Bank of Japan, which is going to be in a situation where it is difficult to cut rates at least drastically. And therefore, the interest rate differential should continue to favor the United States, as it historically has for years, almost an entire career, and in fact probably even longer than that.

Defined Consolidation Range

So, with that being said, it makes a certain amount of sense that the US dollar is somewhat resilient against the yen. And now it looks a lot like a market that is trying to find some type of consolidation area. The consolidation area is an area that is presently defined with 158 yen being the ceiling and 155 yen being the first floor.

Underneath, we have another floor near the 153 yen level. And as long as we stay above there, I think you have a situation where you will be looking to buy dips. That does not mean that it is easy, and it does not mean that it is going to be a slam dunk, but I do recognize that finding value in this pair on dips and taking advantage of cheap US dollars probably remains the way to go forward.

I like the idea of buying dips as we had just seen and taking advantage of the interest rate differential, just simply holding on to the pair and collecting a little bit of profit at the end of every day, and riding the trend as it gains nominal gains, perhaps to the 158 yen level, maybe even higher than that. I have no interest in shorting as things stand right now.

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Created on December 15, 2025

EUR/USD Analysis Summary Today

• Overall Trend: : Within a technical correction upward.
• Support Levels for EUR/USD Today: 1.1690 – 1.1620 – 1.1540
• Resistance Levels for EUR/USD Today: : 1.1790 – 1.1830 – 1.1900

EUR/USD Trading Signals:

• Buy EUR/USD from the support level of 1.1640 with a target of 1.1850 and a stop-loss at 1.1580.
• Sell EUR/USD from the resistance level of 1.1810 with a target of 1.1500 and a stop-loss at 1.1900.

Technical Analysis of EUR/USD Today:

The EUR/USD pair continues to receive positive momentum from the divergence in the future policies of both the US Federal Reserve and the European Central Bank (ECB). Consequently, and according to reliable trading platforms, the Euro/Dollar price recently rose to the 1.1762 resistance level, the pair’s highest in two months, before settling around 1.1733 at the time of writing this analysis. This stability is in anticipation of the crucial reaction this week to the ECB’s policy announcement and the US jobs figures, the latter of which has been long-awaited due to the longest government shutdown in US history.

As is well known, US jobs figures and inflation levels are key factors influencing the Federal Reserve’s policy decisions at upcoming meetings.

Obviously, the technical indicators confirm an upward technical correction for the EUR/USD pair. As shown on the daily chart, the 14-day Relative Strength Index (RSI) has moved towards the 67 resistance level after recent gains, with the nearest point to the overbought line being 70.

Simultaneously, the MACD lines are steadily trending upwards, confirming the bulls’ readiness for further gains if the factors driving the currency’s price increase continue. Breaking above the psychological resistance level of 1.1800 remains crucial to confirming the overall trend shift and simultaneously supports the potential for a move towards the psychological resistance level of 1.2000, which has been identified as a target for trading in 2026.

A scenario for a EUR/USD decline on the same daily chart would require a return to the 1.1500 psychological support level. No major economic data releases are expected today, suggesting that the pair may trade within a narrow range around its current levels.

Trading Tips:

The EUR/USD pair is expected to remain within its recent range. Therefore, avoid placing trades within narrow price movements and wait for the reaction to this week’s key events to determine the most suitable buy or sell opportunities.

EUR/USD Forecast Versus Central Bank Policies

According to currency trading experts’ forecasts, the Euro/Dollar exchange rate will remain supported in this regard. As the new year’s trades approach, currency investors will continue to monitor this divergence. Currently, they are focused on reassessing the possibility that the ECB may become one of the few G10 central banks with serious indications of monetary policy tightening in 2026. This shift would carry positive, albeit limited, implications for the single European currency.

Currency analysts believe that signs of interest rate hikes are beginning to emerge in several G10 markets, supporting currencies like the Australian Dollar, New Zealand Dollar, and Swedish Krona. They predict that, in the baseline scenario, the ECB will keep its monetary policy unchanged in 2026. However, if the market starts pricing in a more hawkish scenario, the Euro price will clearly benefit.

Experts also indicate that financial markets quickly shifted from expecting rate cuts to tentatively pricing in rate hikes in 2026 for the Australian Dollar, New Zealand Dollar, Canadian Dollar, and Swedish Krona—dynamics that have already supported these currencies. As for the Euro, a rate cut has been almost entirely ruled out.

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Created on December 15, 2025

• The British pound shows signs of failure near 1.34 as interest rate expectations favor the US dollar.
• Price action suggests a potential grind lower unless a decisive breakout triggers broad-based dollar weakness.

The British pound initially tried to rally, but it failed a bit during the trading session on Friday. Ultimately, this is a market that continues to ask a lot of questions about the 1.34 level as a potential barrier and perhaps even a ceiling.

This is a market that is trying to figure out what to do with the idea of the Federal Reserve potentially being on hold next year, while the British are most certainly going to be cutting rates soon. A lot of what happens from here comes down to the reality that the interest rate differential will not have changed, and that has a lot to do with how this pair behaves.

It was somewhat odd that the pair sold the US dollar the way it did, because this is a market that looks to be in the process of retesting the previous selloff to see whether or not downward pressure continues. That does appear to be the case.

Key Levels and Downside Risk

If the market breaks down below the 50-day EMA and the 200-day EMA, there is a real chance of a much more significant breakdown. All things being equal, this looks more like a grind lower rather than an explosive move, although that possibility always exists.

On the other hand, if the market were to break above the 1.3450 level, this area on the chart opens the door to a strong move higher. That would align with a scenario in which the US dollar sells off broadly. It is important to pay close attention to that because when the dollar sells off, it typically does so against everything at the same time.

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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

– Written by


Frank Davies

STORY LINK Euro to Dollar Forecast: EUR/USD Near 1.18 as Fed Uncertainty Dominates

The Euro to US Dollar exchange rate (EUR/USD) jumped to two-month highs above 1.1750 after the Federal Reserve delivered a widely expected rate cut but revealed deeper internal divisions.

Markets read the split vote and Powell’s data-dependent tone as a negative for the dollar, keeping the euro supported. Attention now turns to the Fed’s 2026 path and uncertainty over Powell’s successor.

EUR/USD Forecasts: Fed Dominates

Scotiabank forecasts Euro to Dollar (EUR/USD) exchange rate gains to 1.22 by the end of 2026 with a further advance to 1.24 the following year.

SocGen does see scope for EUR/USD gains to 1.20 early next year, but forecasts a steady retreat to 1.14 at the end of 2026.

EUR/USD jumped to 2-month highs above 1.1750 after the Federal Reserve policy decision before consolidating.

The Fed cut interest rates by a further 25 basis points to 3.75% at the latest policy meeting, in line with strong consensus forecasts, but divisions intensified.

There were three dissents against the decision with Schmid and Goolsbee wanting to leave rates on hold while Miran called for a 50 basis-point cut.

Chair Powell emphasised the difficulty in policymaking with higher inflation and weaker employment. He insisted that policy would be data dependent.

According to the latest updates, the median projection is for one further cut in 2026, although there was a wide divergence in forecasts.

Fed policy will remain a key element next year with Chair Powell’s term ending in May and there is a high degree of uncertainty.

Scotiabank commented; “The search for Powell’s successor remains another key risk for the USD, as the current top contender for the role is the dovish-leaning Hassett. Powell’s term (as Chair) officially ends in May, but President Trump has suggested that he could announce his choice as soon as January—setting off a sequence of events that would add significant pressure to the USD into the confirmation and arrival of a new Fed Chair.”

Scotiabank also sees scope for a relatively hawkish ECB stance which would underpin the Euro; “Policymakers had been offering subtle hints over the past few weeks, signaling concerns about upside risks to inflation within the context of an overall balanced outlook.”

Mizuho has an end-2026 EUR/USD forecast of 1.22 and noted; “Fed cuts, German fiscal spending and higher levels of USD FX hedging will lead to a 2017 analogue playing out in 2025/26 but it’s hard to go further than that.”

SocGen also postulated historical comparisons, but does not see a happy ending for the Euro; “There are echoes here of 2020/21 and 2016/17. In both cases, hope that Euro-Zone growth prospects would improve, and monetary policy normalise contrasted with fears that the US economy would suffer a longer-term hangover. In both cases, EUR/USD made it above 1.20, but never got near 1.30 and before long was falling again.”

It added; “over the next few years, unless European economic policy becomes more growth-orientated, a return to the EUR/USD post-2024 average and occasional spikes below 1.10 look depressingly likely.”

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The GBPJPY pair provided a new negative close below the resistance at 208.95, to force it to activate the attempts of gathering gains, to reach 207.35 this morning, facing negative pressures by stochastic exit from the overbought level confirms the importance of reaching extra support at 206.95.

The stability above the targeted support will reinforce the chances of forming positive attempts to target 208.10 level, reaching the mentioned main resistance, while the decline below this support and providing negative close will open the way for resuming the bearish corrective attack, which might target 206.30 and 205.80 level.

The expected trading range for today is between 206.95 and 208.20

Trend forecast: Bearish

The EURJPY pair surrendered since this morning to the bearish corrective scenario, affected by the stability of the barrier near 183.30 besides stochastic exit from the overbought level, activating the attempts of gathering the gains by reaching 182.15.

Renewing the corrective attempts to test the extra support at 181.70, attempting to gather the positive momentum to form bullish waves and recover the current losses by its rally towards 182.80, 

Waiting to breach the barrier to open the way for recording new gains that might extend towards 183.50 reaching the next main target at 184.10 in the near sessions.

The expected trading range for today is between 181.70 and 182.70

Trend forecast: Fluctuated within the bullish trend