– Written by


Ben Hughes

STORY LINK Pound Sterling to Dollar Forecast: Can GBP Break Higher as USD Backing Fades?

The Pound to US Dollar exchange rate (GBP/USD) remained capped below 1.35 as signs of fragility in the US labour market offset lingering caution over global risk conditions.

With momentum slowing, traders are watching whether support can hold above the mid-1.34s.

GBP/USD Forecasts: Hold Near 1.35

The Pound to Dollar (GBP/USD) exchange rate has been held in tight ranges and traded just below 1.35 after the New York open. Tough resistance remains above 1.3550.

According to Scotiabank, the trend is bullish, but momentum has faded; “We note the importance of the 200 day MA at 1.3388, and we look to a near-term range roughly bound between 1.3450 and 1.3550.

UoB added; “Upward momentum has slowed with the pullback, and today, we expect GBP to range-trade, most likely between 1.3470 and 1.3535.”

Equity markets were less confident on Wednesday with limited pullbacks and the tone surrounding risk appetite was slightly less confident.

There is scope for increased volatility given geo-political tensions and important US data releases.

According to Scotiabank; “Calm, low volatility trading risks getting a shake up over the coming days.”

US ADP jobs data recorded an increase in private payrolls of 41,000 for December, slightly below consensus forecasts of around 50,000 and followed a revised 29,000 decline for November.

ADP chief economist Dr. Nela Richardson commented; “Small establishments recovered from November job losses with positive end-of-year hiring, even as large employers pulled back.”

Elsewhere, the JOLTS data recorded a decline in job openings to 7.15mn for November from 7.45mn previously and below consensus forecasts of 7.60mn.

There was, however, a stronger than expected reading for the ISM services-sector index.

Overall, markets are still not expecting the Federal Reserve to cut rates again in January, although traders are still on alert for an announcement on the next Fed Chair.

ING commented; “Beyond today, our short-term view remains neutral to slightly bullish on the greenback.”

Geo-political developments will be watched closely with Venezuela and Greenland both important areas.

Macquarie Group global forex and rates strategist Thierry Wizman commented; “Traders seem to be okay with the rhetoric coming from the U.S. when it does not imply that ‘boots on the ground’ will be needed to run Venezuela.”

He added; “A military invasion and a prolonged on-the-ground conflict would have risked a major dollar depreciation, as did the Iraq and Afghanistan wars in 2002-2008,

There has also been speculation that the Supreme Court could announce a decision on US reciprocal tariffs on Friday when it will hold an opinion day.

If there is a decision, MUFG commented; “We lean toward the Supreme Court striking down the use of IEEPA which will trigger a bout of uncertainty for US companies once again.

The bank expects there are plans to expand other tariffs if necessary.

According to the bank; “It’s unlikely that Plan B will be as all-encompassing and hence tariff revenue expectations would likely be downgraded, potentially steepening the US Treasury yield curve and potentially weakening the dollar. In any case, it adds renewed uncertainties for US companies that would be unhelpful for corporate sentiment.”

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TAGS: Pound Dollar Forecasts

Created on January 08, 2026

The US dollar continues to drift a bit against the yen, as we are in the middle of a major consolidation area. Traders will likely be focused on Non-Farm Payroll this Friday for the next move.

The US dollar drifted a little bit lower against the Japanese yen during early trading on Wednesday, as we continue to stay stuck between two major levels in consolidation. With that, I’m watching the 158 yen level above very carefully as it is a major resistance barrier, and the 154.50 yen level below as it is a major support level. It’s worth noting that the 50-day EMA has just crossed the 155 yen level, so it is potential support there as well.

As we go through the week, we’ll start to focus on the non-farm payroll announcement, and that tends to have a major influence on this pair and, by extension, causes it to react to the bond markets, which obviously will move as well. The interest rate differential still favors the US dollar, so I still favor the upside overall.

Market Reaction to Bank of Japan

I also recognize that this is more or less a consolidation than anything else. The market is likely to remain somewhat tight and rangebound for the short term, but eventually, we will have to make a decision, perhaps in the next Bank of Japan meeting, as there are a lot of questions as to whether or not they will actually attempt to tighten monetary policy.

With the massive amount of debt in Japan, it’s difficult to imagine that being a long-term play, but in the short term, it does cause some noise here. Anything above the 158 yen level really has this market taking off. I suspect running to the 160 yen level.

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

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.

Oil Steadies After Recent Declines, with Geopolitical Tensions and Data Still in Focus

has steadied around 56.00 after two days of declines. Oil prices have fallen 2% so far this week as Venezuela’s supply weighs on the market and investors digest recent data.

Oil has been under pressure following the U.S. announcement of plans to import 50 million barrels of Venezuelan crude oil, raising concerns about oversupply.  While typical geopolitical tensions in an oil-producing region can lift oil prices. This isn’t the case here as the prospect of increased supply keeps prices under pressure.

There have been some supportive developments that have helped stem the selloff.

US crude stockpiles fell by more than expected, an indication of demand strength, which, together with a stronger-than-expected , helped to support prices for now. Attention will turn to US and Chinese inflation data.

Investors will continue to monitor geopolitical developments, particularly reports in the Wall Street Journal that Trump plans to assume long-term control of Venezuela’s oil to bring prices down to $50 per barrel.

Oil Forecast- Technical Analysis

Oil trades in a multi-month descending channel. Recent failure to rise above the 50 SMA, combined with the RSI below 50, keeps sellers hopeful of further declines.

After rejection at the 50 SMA, the price rebounded lower and is testing support at 56.00, the October low. Sellers will look to take out this level, opening the door to 55.00, the 2025 low. Below here, attention turns to 50.00, a level last seen in 2021.

On the upside, resistance is seen at 58.70, the 50 SMA, and the upper band of the falling channel. A rise above here creates a higher high and brings 60.00, the round number, into focus. A rise above here exposes the 200 SMA at 62.50.

EUR/USD Holds Steady Ahead of US Data

is holding steady for a second day following mixed data yesterday and ahead of further US figures today.

The pair is so far on track for a small decline at the start of 2026, following a 13.5% jump last year.

The EUR is looking ahead to consumer, business, and economic sentiment data for the region. This comes after yesterday’s inflation figures, which showed eased to 2% YoY, down from 2.1% in November and reaching the ECB’s target level for the first time since August. The data support the view that the ECB will not cut rates again this year, which could keep the EUR underpinned.

However, investors will closely monitor the Trump Greenland story. While this is not impacting the EUR for now, any sense that Trump could move forward with plans to acquire Greenland could pull the EUR lower.

The is calm on Thursday ahead of US jobless claims. Data on Wednesday showed that the US labour market was in a low-hiring, low-firing state, with job openings falling by more than forecast. However, the service sector unexpectedly ramped up in December, with the services PMI reaching a 14-month high. These data points present a mixed picture for the Federal Reserve, which could reinforce a cautious stance.

The market is pricing in two this year, compared with the Fed’s one. Policymakers are divided over the outlook, but no rate cut is expected this month.

EUR/USD Forecast- Technical Analysis

EUR/USD’s recovery from 1.15, the November low ran into resistance at 1.18 and rebounded lower. The price is testing the 1.1670 support zone.

Sellers supported by the RSI below 50 will look to break below this support zone and the 50 SMA at 1.1640. A break below here exposes the 200 SMA at 1.1560 before bringing the 1.15 level back into focus.

Should the 1.1670 support zone hold, buyers will look to rise above 1.17 before bringing 1.18 into play.

Original Post

The EURJPY pair continued providing weak sideways trading, fluctuating near the extra support at 182.80, affected by the continuation of the main indicators besides forming extra obstacle at 183.50 level as appears in the above image.

Therefore, we will remain neutral until providing signal for detecting the main trend in the near and medium trading, while breaking the current support and providing negative close will confirm the bearish corrective trend, which might target 182.30 and 181.75 level initially, while breaching 183.50 level will ease the mission of detecting the bullish attempts, to expect its rally towards 183.85, to attack the broken channel’s support in order to find an exit for regaining the bullish trend again.

The expected trading range for today is between 182.80 and 183.50

Trend forecast: Neutral

The EURJPY pair continued providing weak sideways trading, fluctuating near the extra support at 182.80, affected by the continuation of the main indicators besides forming extra obstacle at 183.50 level as appears in the above image.

Therefore, we will remain neutral until providing signal for detecting the main trend in the near and medium trading, while breaking the current support and providing negative close will confirm the bearish corrective trend, which might target 182.30 and 181.75 level initially, while breaching 183.50 level will ease the mission of detecting the bullish attempts, to expect its rally towards 183.85, to attack the broken channel’s support in order to find an exit for regaining the bullish trend again.

The expected trading range for today is between 182.80 and 183.50

Trend forecast: Neutral

Image © Adobe Images

CIBC says the U.S. dollar is likely to weaken into the first half of 2026 before stabilising and recovering later in the year, describing its outlook as “U-shaped”.

The Canadian bank said “risks will push the USD lower in the next couple of quarters”, arguing that downside risks to the U.S. labour market and growth will outweigh any modest upside risks to inflation.

CIBC said unresolved questions over who ultimately bears the cost of tariffs are “stagflationary and should push USDs lower in the early months of 2026”.

It warned that if firms absorb tariff costs, they may be forced to cut labour to protect margins, while if consumers pay, inflationary pressures would rise, both scenarios weighing on the dollar.

The bank also said uncertainty over Federal Reserve independence could be a major theme early next year, noting that “the appointment of the Federal Reserve Chair has yet to be decided”.

Legal challenges to Trump’s IEEPA tariffs could further undermine the greenback, with CIBC saying a ruling against them would likely trigger rallies in trade-sensitive currencies that would “mechanically lead to a weaker greenback”.

Above: Traders are betting the Fed will be the biggest cutter this year, underpinning a bearish USD consensus.

CIBC said these risks are front-loaded and “not long lasting”, arguing that markets will eventually conclude that expectations for U.S. interest rate cuts have gone too far.

The bank believes the Fed’s estimate of neutral interest rates is mispriced, saying “the true value is 50bps higher”, which should ultimately support the dollar later in 2026.

CIBC said it expects “an inflection point for the greenback to turn slightly higher” by mid-year, forecasting the dollar index to fall to 96.0 by the end of the second quarter before recovering to 97.30 by the end of 2026.

For the likes of EUR/USD and GBP/USD the implications are relatively straightforward: As long as the dollar index is falling, these pairs are rising.

All else equal, further advances into the middle of the year before falling into year-end.

Created on January 07, 2026

• I am not interested in shorting, as the interest rate differential is simply too great here.
• The British pound initially pushed higher against the Japanese yen during trading on Tuesday, but has since pulled back just a bit.
• All things being equal, this is a market waiting for some type of reason to go higher, and that reason will more likely than not come into play via risk appetite.
• Regardless, this is a market that is very obviously strong, and I have no interest in fighting the overall trend.

The market could end up being a scenario where we just remain buy on the dips and slowly grind higher. When you look at the chart, you can see that the Monday session was a serious attempt to break out of a bullish flag, and if we look at that as a bullish flag, then we could be looking at a move to 216 yen based on the measured move.

Carry Trade Momentum

Ultimately, this is a scenario where I don’t have any interest in shorting this market because, quite frankly, I don’t want to pay the interest rate differential. Even though the Bank of England has recently cut rates, it is going to do so very slowly, while the Japanese are supposedly raising rates.

The situation is that the interest rate differential is so wide that it’s going to take a long time for that to truly come into play. You could also make an argument that most traders believe that the Japanese can only raise rates so high due to their debt load. With that being the case, we find ourselves in, and of course, the overall momentum, I think the carry trade is alive and well, and I will continue to take advantage of it by buying the British pound against the Japanese yen going forward.

Begin trading our daily forecasts and analysis. Here is a list of Forex brokers in Japan to work with.

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.

Created on January 07, 2026

• The Euro has stabilized against the British Pound on Tuesday as we find ourselves testing the crucial 200-Day EMA.
• If it holds, a “fade the rally” move could set up.
• The fundamental context in this pair is that the British Pound had been trading very weakly against the Euro.

The interest rate cut from the Bank of England was more or less a hawkish cut, meaning that they brought rates down to 3.75% but they also mentioned the resilient service sector and the FTSE 100’s break above the 10,000 level as signs that there is still a lot of belief in the growth of the UK economy and perhaps it’s not as sluggish as people had thought. They thought that the central bank would have to come in and save everybody essentially.

Market Outlook and Key Levels

Conversely, the Euro has been struggling with risks following the Bulgarian entry into the Eurozone and a wait-and-see approach from the ECB. German inflation data has been released during the session; it’s easing towards 2.2%. It reinforces the view that the ECB doesn’t have a lot of room for hawkish surprises and therefore they probably have to sit fairly still. This could continue to hamper any Euro strength not only here, but everywhere else as well.

If we do rally from here, the market reaching towards the 0.8725 level is a very real possibility, with the 0.8750 level above there being an area that I would watch.

If we break down below the 200-day EMA, then the 0.86 level is your initial support, and if we break down below that, the bottom falls out here. I do think we are in the midst of some type of trend change, but we’ll just have to wait and see. I prefer to fade rallies that show signs of exhaustion.

Ready to trade our daily forecast and analysis? Here’s a list of some of the top forex brokers UK to check out.

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


Ben Hughes

STORY LINK Pound-to-Dollar Forecast: GBP/USD Near Breakout, But Risks Remain

The Pound to Dollar exchange rate (GBP/USD) climbed to three-month highs after rebounding from support in the low-1.34s, but the pair now faces stiff resistance as trading conditions thin and the dollar attempts to stabilise.

The next move will determine whether sterling can build momentum into the new year.

GBP/USD Forecasts: 3-Month Highs

The Pound to Dollar (GBP/USD) exchange rate found support below 1.3420 on Monday and rebounded strongly to above 1.3500 amid a firm Pound performance and dollar setback.

GBP/USD hit 3-month highs near 1.3570 before consolidation just below 1.3550 with markets still assessing whether there is scope for a decisive breakout.

According to UoB; “Although upward momentum has not increased significantly, GBP could rise to 1.3590. Currently, the odds of a continued rise above this level are not high.”

Scotiabank added; “Risk reversals are little changed, offering little in terms of sentiment-driven movement. We are neutral awaiting a break of the two-week range roughly bound between 1.34 and the mid1.35s.”

Overall risk appetite has held steady with the UK FTSE 100 index posting a fresh record high while there were further gains for precious metals and commodities.

The Pound will gain net support if risk appetite holds firm.

The dollar failed to gain sustained support from geo-political considerations, but there is a high degree of uncertainty over both Venezuela and the wider regional considerations.

ING is not convinced that there will be sustained dollar losses; “Despite the quick unwinding of safe-haven USD demand yesterday, we remain modestly biased to a stronger dollar in the near term. Seasonality is positive in January, and markets’ sanguine stance on geopolitics leaves risk assets and high-beta currencies exposed to re-escalations, both in Latam and potentially in Greenland.

Danske Bank also preached some caution; “Global markets generally performed well on Monday, but President Trump’s threats against Colombia and Mexico, along with renewed talk of annexing Greenland, underscore that geopolitical tensions remain elevated as the new year begins.”

The US ISM manufacturing index edged lower to 47.9 for December from 48.2 previously. This was slightly below consensus forecasts and the sector has been in contraction territory for the last 8 months which hampered the dollar.

Capital Economics commented; “The modest decline in the ISM Manufacturing Index in December confirms that the sector was struggling for momentum around the turn of the year, but we doubt that this will be enough to prevent overall GDP from expanding at a solid pace in the coming quarters.”

The dollar could gain some net support if the overall US economy holds firm, but the global perspective will also be important.

MUFG commented; “Evidence of strengthening global growth momentum is a supportive factor for our forecast for the US dollar to weaken further in 2026 even as US economic growth is expected to pick-up as well during the first half of this year driven by stimulus from President Trump’s One Big Beautiful Bill.”

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TAGS: Pound Dollar Forecasts

• The USD/JPY forecast tilts to the downside as BoJ-Fed divergence favors yen.
• Risk-off sentiment strengthens yen but limits gains amid dollar’s own haven appeal.
• Today’s US ADP jobs report is crucial to watch, along with the US ISM PMI and JOLTS data.

The USD/JPY remains under mild pressure as the Japanese yen continues to find support from changing policy expectations and a weaker US dollar backdrop. Momentum has obviously slowed, indicating growing uncertainty over the next directional move, even though the pair is still trading at high levels around the mid-156 area. The market is increasingly focused on the widening policy divergence between the Bank of Japan, which is cautiously tightening, and the Federal Reserve, which is edging closer to an easing cycle.

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The yen’s recent resilience is largely driven by the growing acceptance that the BoJ’s long-awaited normalization process is not a one-off move. Governor Kazuo Ueda’s most recent remarks reaffirmed the likelihood of further interest rate hikes if inflation remains elevated. Rising wages, persistent pressure on service sector prices, and tighter labor conditions strengthen the argument for gradual tightening. This change has already caused yields on Japanese government bonds to reach multi-decade highs, reducing one of the main causes of yen weakness and closing the yield gap with the US.

At the same time, investors remain cautious about pushing the yen too aggressively higher. Uncertainty around Japan’s fiscal outlook, highlighted by the approval of a record budget, and questions over the exact timing and pace of future BoJ hikes continue to temper bullish conviction. As a result, USD/JPY has avoided a sharp sell-off and instead is grinding lower in a controlled manner.

Geopolitical risks add another level of complexity. The demand for safe havens has been boosted by growing tensions associated with Venezuela and other global flashpoints. However, the dollar’s inflows during periods of high US yields have lessened the yen’s influence. Even so, upside movements are still constrained, especially in the upper 150s, by the possibility of verbal intervention from Japanese authorities.

On the US side, the dollar is struggling to find sustained support. Markets are increasingly pricing in further Federal Reserve rate cuts later this year, with policymakers stressing the need to stay data-dependent as inflation cools and labour market conditions soften. This week’s run of US data, including ADP employment figures, ISM Services PMI, and JOLTS, may influence short-term moves, but the main event remains Friday’s Nonfarm Payrolls report. A weaker-than-expected jobs reading would likely reinforce expectations of a dovish Fed and put renewed downside pressure on USD/JPY.

USD/JPY Technical Forecast: Consolidating Near Key MAs

The USD/JPY 4-hour chart shows consolidation between 20- and 50-period MAs, while the confluence of 100- and 200-period MAs supports the pair’s upside bias. The RSI also remains flat under the 50.0 level, suggesting no clear bias in the short term.

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A break above the 20-period MA at 156.60 could trigger a bullish breakout and look to test 157.30 ahead of 157.75. On the other hand, moving below the 200-period MA at 156.10 could prompt the pair to test the 155.55 support level ahead of 155.00.

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