– Written by


David Woodsmith

STORY LINK GBP/USD Forecast: Pound Sterling Falls after Sharp Inflation Slowdown

The Pound US Dollar (GBP/USD) exchange rate traded on the back foot on Wednesday following the release of the UK’s latest inflation figures.

At the time of writing, GBP/USD was trading at around $1.3385, marginally lower than the opening levels seen earlier in the session.

The Pound (GBP) struggled for momentum on Wednesday after UK inflation data fell short of expectations.

Figures published by the Office for National Statistics showed headline inflation slowed from 3.3% to 2.8% in April, missing forecasts for a smaller decline to 3%.

Core inflation also eased more sharply than expected, slipping from 3.1% to 2.5%, compared to market expectations for a reading of 2.6%.

Analysts attributed much of the slowdown to the reduction in the UK energy price cap last month, although many warned that rising geopolitical tensions in the Middle East could still fuel inflationary pressures later in the year.

The softer inflation figures, combined with the weak UK labour market data released earlier in the week, prompted investors to scale back expectations that the Bank of England (BoE) will raise interest rates in the near term.

The US Dollar (USD) found moderate support during Wednesday’s session as cautious market sentiment boosted demand for safer assets.

Investor nerves remained frayed by ongoing uncertainty surrounding relations between the US and Iran.

Although hopes for a diplomatic resolution have not completely faded, reports of renewed tensions and continuing disagreements over access through the Strait of Hormuz kept traders wary.

Still, gains in the ‘Greenback’ were somewhat restrained ahead of the release of the latest minutes from the Federal Open Market Committee’s most recent policy meeting later in the evening.

Near-Term GBP/USD Forecast: Weak UK PMIs to Extend Sterling Losses?

Looking ahead to Thursday, the Pound to US Dollar (GBP/USD) exchange rate could remain under pressure with the publication of the UK’s latest PMI surveys.

Should the preliminary May data point to weaker growth across the UK private sector, expectations for further BoE tightening may continue to fade, leaving Sterling vulnerable to additional losses.

Meanwhile, the latest US S&P PMI releases may also influence movement in the US Dollar. Although they tend to have less impact than the ISM surveys, any signs that business activity in the US economy remains resilient could lend further support to the ‘Greenback’.

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TAGS: Pound Dollar Forecasts

The British pound also fell early during the session, but it looks like the 1.34 level is trying to hold the pair up.

We are sitting right around the 200-day EMA that could come into the picture and if we rally from here, we could see a move towards the 50-day EMA. But if we were to break down below the bottom of the trading session up to now on Tuesday, it could send this market down to the 1.33 level.

Ultimately, this is a market that I think continues to be very noisy around the 200-day EMA and with a significant amount of chop, I think if you start to look at this through the prism of short-term charts, I don’t think we’re ready for a big move. We are just sitting right in the middle of what I think is a 200-pip range.

USD/JPY Technical Analysis

• The Euro has fallen to break down below the 200-day EMA on Tuesday as interest rates continue to be a major driver of where we go.

• The US 10-year yield is now above 4.67%, which is extraordinarily high compared to recent years and with that being the case it makes sense that the US dollar will strengthen.

The Euro of course is suffering at the hands of the potential for a lack of energy in the European Union if the situation in the Middle East continues to be a problem.

By breaking below the 200-day EMA we have seen a decided negative shift in the EUR/USD market and it looks like we could go down to the 1.15 level, possibly even the 1.14 level.

Watching the Potential Ceiling

The market has previously been bouncing around in a range that is supported at the 1.14 level, so it does make sense that we might try to get down there. The 1.1850 level above is a significant barrier and something that we need to watch very closely as the potential ceiling.

We’re basically just breaking down below the fair value area if you will and as a result I think we’ve got a situation where the US dollar just continues to outwork everything else and that of course will include the Euro.

I’m not looking for a meltdown here, but I do believe that given enough time the Euro will reach to the bottom of this range unless something drastic happens where the Strait of Hormuz suddenly gets opened and even then, we’ve got some rocky road ahead of us.

Ready to trade our EUR/USD daily forecast? Here’s a list of some of the top forex brokers in Europe 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.

As seen on: Pairs Of Aces Podcast,The Trader Guy, FXEmpire

The price of platinum yesterday succumbed to repeated negative pressures, breaking the stable support level at $1950.00, signaling its readiness to resume the corrective decline by currently settling near the first additional target at $1910.00.

The stochastic indicator is observed to be positioned in the oversold area, which further increases bearish pressure on today’s trading, raising the chances of targeting additional downside levels as the price is drawn toward $1865.00. A break below this level could extend losses toward $1820.00 and $1780.00 respectively.

On the other hand, a break above the stable barrier near $2080.00 would cancel the negative outlook and open the door for a renewed upward move in the upcoming sessions.

The expected trading range for today is between $1865.00 and $1950.00

Trend forecast: Bearish

– Written by


David Woodsmith

STORY LINK GBP/USD Forecast: Softer Wage Growth Weighs on Pound Sterling

The Pound US Dollar (GBP/USD) exchange rate moved lower on Tuesday following the release of weaker-than-expected UK labour market figures.

At the time of writing, GBP/USD was trading at around $1.3396, down roughly 0.4% from the opening levels of Tuesday’s session.

The Pound (GBP) came under pressure on Tuesday as disappointing labour market data brought Sterling’s recent gains to a halt.

According to figures released by the Office for National Statistics (ONS), the UK unemployment rate unexpectedly ticked up from 4.9% to 5% in March, while wage growth slowed from 3.6% to 3.4%.

The easing in pay growth unsettled GBP investors in particular, as it suggested household incomes are struggling to keep pace with inflation amid elevated energy prices linked to the ongoing Middle East crisis.

As a result, markets scaled back expectations for further monetary tightening from the Bank of England (BoE), with some analysts questioning whether policymakers will still move ahead with a rate hike in June.

The US Dollar (USD) strengthened modestly on Tuesday as investors continued to favour safer assets amid lingering geopolitical uncertainty.

Market caution remained tied to developments in the Middle East, where tensions between the US and Iran continue to cloud investor sentiment.

Late on Monday, US President Donald Trump claimed via social media that he had abandoned plans for military action against Iran following appeals from Gulf nations and because ‘serious negotiations’ were underway.

Despite the comments, markets remained sceptical, with many investors unconvinced that a breakthrough in talks is close given the significant divisions that remain between Washington and Tehran.

Near-Term GBP/USD Forecast: Softer UK Inflation to Pressure Sterling?

Looking ahead, the Pound to US Dollar (GBP/USD) exchange rate may remain on the back foot on Wednesday with the release of the UK’s latest inflation figures.

Economists expect April’s consumer price index to show inflation cooling, despite elevated global energy prices, which could further reduce expectations for a near-term BoE interest rate increase.

Meanwhile, USD investors will be closely watching the publication of the minutes from the Federal Reserve’s latest policy meeting.

If the minutes suggest policymakers are becoming more concerned about inflation risks and open to further tightening, the US Dollar could strengthen further through the midweek session.

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The GBPJPY pair reached 211.20 level in its last negative moves, affected by the positivity of the main indicators, to notice forming a strong bullish trend to retest %50 Fibonacci correction level at 213.50 to settle below it.

The stability below 213.50 level will make the price renew the corrective attempts, gathering the negative momentum makes us expect reaching 212.35 initially, to repeat the attempts of breaking the barrier at 211.80, while its rally above 213.50 might provide a chance for attacking the main barrier at 214.50, which represents a key for detecting the main trend in the upcoming trading.

The expected trading range for today is between 212.30 and 213.50

Trend forecast: Bearish

Interest rates around the world continue to climb and that of course will make the Japanese Yen a little less interesting. And as long as that’s the case, you get paid to hold on to this position to the upside, then traders are probably going to prefer the Euro.

Geopolitical Factors and Technical Levels

The overall attitude of markets right now is one that we don’t really know what to do because most of what’s throwing things around would be headlines coming out of the Middle East which can change at any given moment. President Donald Trump has now given the Iranians another ultimatum for the end of day tomorrow before things start getting ugly again and I think people are going to be watching that as well.

If we can break above the 185.50 Yen level, that could open up a move towards the 188 Yen level, but keep in mind the Bank of Japan has previously intervened in that region.

Short-term pullbacks I think may make nice buying opportunities extending all the way down to the 182 Yen level in the EUR/JPY pair. I think you’ve got an environment now where you are buying dips, but we don’t know whether or not we are going to truly take off to the upside or if it’s going to be more of a bumpy ride back and forth, maybe consolidating a little bit in order to try to kill time waiting for the next move in risk appetite.

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.

As seen on: Pairs Of Aces Podcast,The Trader Guy, FXEmpire

The GBPJPY pair reached 211.20 level in its last negative moves, affected by the positivity of the main indicators, to notice forming a strong bullish trend to retest %50 Fibonacci correction level at 213.50 to settle below it.

The stability below 213.50 level will make the price renew the corrective attempts, gathering the negative momentum makes us expect reaching 212.35 initially, to repeat the attempts of breaking the barrier at 211.80, while its rally above 213.50 might provide a chance for attacking the main barrier at 214.50, which represents a key for detecting the main trend in the upcoming trading.

The expected trading range for today is between 212.30 and 213.50

Trend forecast: Bearish

The Pound to Dollar (GBP/USD) exchange rate retreated towards 1.3380 after failing to hold gains above the 1.34 level, with Sterling undermined by a stronger US Dollar and renewed concerns surrounding UK political and fiscal risks.

ING notes that the global bond-market sell-off has become an important negative for the Pound, particularly as investors reassess exposure to economies with widening fiscal pressures.

The bank considers that recent UK political developments have increased uncertainty surrounding fiscal policy credibility and could trigger a higher Sterling risk premium.

“During this period, international investors may want to avoid UK exposure, and at its extreme, another 3-4% in risk premium could be priced into sterling.”

ING also notes that rising US Treasury yields continue to support the Dollar more broadly as markets scale back expectations for Federal Reserve rate cuts.

That combination leaves GBP/USD vulnerable in the short term, especially if global risk appetite deteriorates further.

The bank expects support around the 1.3250–1.3300 area to come under increasing focus if bond-market volatility persists.

At the same time, ING still considers Sterling relatively better positioned against the Euro given ongoing structural growth concerns within the eurozone.

Near-term direction will depend heavily on global bond markets, Federal Reserve expectations and whether UK political tensions continue to intensify.

For now, ING considers that the balance of risks remains tilted towards further GBP/USD weakness.