• The GBP/USD weekly forecast edges lower as the US dollar gains on upbeat economic data.
• US services PMI and employment data revealed sufficient resilience to lift the dollar.
• The coming week’s US CPI, PPI, and UK GDP are the events to watch.

GBP/USD fell last week as a string of better-than-expected US economic data indicated the dollar was strong and pushed back expectations for Federal Reserve rate cuts in the near future. The pair fell after failing to maintain its early-week gains. US services and labor data, not any UK developments, drove the move.

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The first pressure arose when the US ISM Services PMI came in higher than expected, indicating that the services sector is still growing despite high interest rates. The new orders and prices paid for parts stayed the same, which supports the idea that inflation risks in the service economy are still high. This helped the dollar and pushed US Treasury yields higher, which in turn pushed the GBP/USD down.

The ADP Employment Report, released mid-week, showed that hiring in the private sector remained stronger than expected. The data made markets less likely to expect aggressive easing and more likely to want the dollar ahead of Friday’s jobs report, even though it isn’t always a good predictor of official payrolls.

Following Friday’s Nonfarm Payrolls report, which showed that job growth remained strong and unemployment was lower than expected, the GBP/USD pair fell even faster. Wage growth also remained strong, which alleviated concerns about a rapid decline in the job market. The data made it less likely that the Fed would cut rates early, which helped the dollar end the week strong and put sterling on the defensive.

The market’s direction next week will hinge on whether the new data on inflation and activity reinforce the notion of a robust US economy or pave the way for earlier policy easing.

GBP/USD Major Events Next Week:

• The US CPI inflation report will show whether price pressures are easing or staying the same
• US PPI data, which shows how inflation is changing upstream
• US retail sales, to gauge consumer demand
• Weekly unemployment claims for unemployment benefits in the US provide insight into the job market in the near future.
• UK GDP numbers, which could change expectations about the Bank of England’s policy outlook

If US inflation or consumer data worsens, the dollar will likely remain strong, and the GBP/USD will remain under pressure. On the other hand, lower prices or spending, along with weak UK GDP risks, could alter the market’s direction and allow sterling to stabilize or bounce back.

GBP/USD Weekly Technical Forecast: Critical Demand Zone at 1.3400

The daily chart for GBP/USD suggests a strong bearish momentum after falling below the 100-day MA with a bearish crossover of 20- and 50-day MAs. However, the price holds near the demand zone at 1.3400, while a breakout could push the price further lower towards the 200-day MA at 1.3350.

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Alternatively, finding adequate buying around 1.3400 could push the price higher to test the confluence of 20- and 100-day MAs around 1.3450 ahead of 1.3500.

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Created on January 09, 2026

• The carry trade is still a very strong driver at the moment in a lot of the Japanese yen-related pairs, including the USD/JPY market.
• The US dollar drifted a bit lower against the Japanese yen to kick off the Thursday session, but we have seen a turnaround show us signs of upward momentum.
• The carry trade is still a very strong driver at the moment in a lot of the Japanese yen-related pairs, so despite the fact that the Bank of Japan has recently raised interest rates, the reality is that they are light years away from trying to tighten monetary policy enough to really turn things around.

With this being said, the market will, of course, remain a little bit noisy, but if we can break to the upside and finally clear the 158 yen level, we could really take off. At that point, I think we could go looking to the 160 yen level, which is an area where the Bank of Japan intervened ages ago.

Technical Support and Future Targets

Short-term pullbacks will end up being buying opportunities, I believe, and as a result, the support levels that I’m watching include the 50-day EMA and the 155 yen level. These are areas that I think will remain very important, but I think it is difficult to break down below.

If we were to break down below that area, then you could have a lot of problems for the US dollar, and I think you have a situation where if that does in fact happen, the 152 yen level might be your next target.

Ultimately, though, despite the fact that the Bank of Japan has raised interest rates and the Federal Reserve has cut, you still have a pretty wide gap between the two, and therefore, if you’re looking for the carry trade to play out, you are looking for the US dollar to remain somewhat resilient against the Japanese yen. Beyond that, the US dollar itself is fairly resilient, mainly due to the fact that the economic numbers coming out of America are stubbornly strong, so even if the Federal Reserve does cut it can only do so in a limited way.

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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.

The GBPJPY pair lost the bullish momentum due to stochastic exit from the overbought level, which forces it to delay the bullish attack by reaching below 211.30 level, which keeps forming an important obstacle against the bullish attempts.

We expect providing new mixed trading with a chance of attacking the minor bullish channel’s support at 210.10, breaking this support makes us expect targeting extra corrective stations that might begin at 209.45 and 208.80, while the trading rally above the obstacle will increase the chances of recording new gains by targeting 212.55 and 213.75 level.

The expected trading range for today is between 210.10 and 211.50

Trend forecast: Fluctuated within the bullish trend

GBP/USD Technical Analysis

The British pound, of course, has drifted a little bit lower. We are in an area of consolidation. I don’t think that changes today. You could, in theory, see a little bit of a bounce when we get closer to 1.34, but really, I think this is the domain of short-term traders more than anything else, with 1.35 being a bit of a magnet for price.

The Bank of England is expected to cut rates as well, but it is expected to do so in a much slower and gradual manner than the market once thought, hence the British pound’s strength over the last couple of months. I think this is a currency that, relatively speaking, at least will fare better than many others against the greenback.

EUR/GBP Technical Analysis

The euro has climbed slightly against the British pound as we continue our bounce from the 200-day EMA, but I will direct you to my analysis from a couple of days ago. I think we’re going to start drifting towards the 0.8720 area and then maybe see some exhaustion that we can start shorting again.

While the Bank of England is expected to cut rates, it’s doing so at a much slower pace, and this, of course, is in comparison to the ECB, which is basically on hold, so we already know that the interest rate differential will continue to favor the pound for some time. That doesn’t necessarily mean that we fall apart. I just think that you’re going to continue to see more of a rally and then a fade type of situation going forward.

For a look at all of today’s economic events, check out our economic calendar.

Created on January 08, 2026

The British pound continues to consolidate on Thursday, as we are waiting for the all-important Non-Farm Payroll numbers in the United States.

• I am looking at the British pound against the US dollar. The British pound continues to consolidate, although it was somewhat negative during the trading session on Thursday, but I think you’ve got a situation where we’re basically bouncing around between 1.34 and 1.3550.
• With that, we’re waiting on something. I think the most obvious candidate will be the non-farm payroll announcements coming out on Friday in the United States.

The non-farm payroll announcement, while in and of itself isn’t particularly interesting and not even particularly accurate, will have a major influence on what people think the Federal Reserve will do. The unemployment rate in America is expected to be 4.5%. The non-farm employment change is supposed to be an addition of 66,000 jobs.

With that being the case, I think it comes down to the number. The higher the number, the better off the US dollar does because we have a situation here where the Bank of England is cutting but is doing so slowly, and if the Federal Reserve has a reason to pause, then that means the dollar is mispriced.

Monitoring Support and Resistance

That being said, in the short term, it looks like we’re still range-bound. It will be interesting to see if we can break out of this little rectangle. A move above 1.36 would be bullish, especially if the US dollar is falling against everything else. In that case, then yes, the GBP rises here.

On the other hand, if we break down below the 50-day EMA currently right at the 1.3367 level, then I think you start to see the dollar strengthen against the pound quite a bit, maybe even a couple of handles.

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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.