GBP/USD Forecast: Pound Sterling Slips Below Scotiabank Support

Pound Sterling has slipped below Scotiabank’s near-term support area as the UK Budget approaches, although the bank still sees buyers returning on dips.

Pound Sterling slipped below a near-term support area on Monday, putting Scotiabank’s warning of a retreat towards $1.33 into focus before Wednesday’s UK Budget.

The Pound-to-Dollar exchange rate was trading at $1.3347, down 0.22% on the day and just beneath the bank’s $1.3350-$1.3355 reference zone.

Its strategists label the short-term outlook neutral to bearish: “GBP gains through the low 1.34 area late last week may have stalled and price may be reversing modestly with minor support at 1.3350/55 under a little pressure. Spot losses may extend to the 1.33 area below here.”

The $1.33 reference is a conditional technical projection with no fixed date, not a year-end forecast.

Scotiabank has not abandoned the more constructive signal from Pound Sterling’s mid-October rebound.

“Broader price action is positive, following the solid mid-October rebound from the low 1.31 area, however. Modest GBP losses should entice support from bargain-hunters.”

A credible Budget may deliver little fresh currency support

Chancellor John Healey’s 28 October Budget comes against higher debt-servicing costs, with updated official forecasts accompanying the statement.

Scotiabank’s assessment suggests investors already expect a broadly reassuring outcome.

“The UK weekend press coverage of Chancellor Healey’s Wednesday budget announcement centered mostly on the need for the government to maintain fiscal credibility.”

The bank adds: “More social spending will have to be balanced by revenue increases (with a higher surcharge on bank profits above GBP100mn thought likely).”

The possible bank surcharge is part of that pre-Budget discussion, not an announced measure.

Scotiabank says: “Despite sterling’s drift today, most commentators assume that Healey will deliver a credible budget which may be largely sterling-neutral. Front-end GBP vols are, however, relatively elevated, suggesting investors are cautious.”

Those short-dated measures of expected exchange-rate volatility indicate investors are still allowing for movement around the announcement, despite the broadly calm fiscal assumption.

The Budget is only half of Wednesday’s test for GBP/USD, with the Federal Reserve’s October meeting ending that day too.

In its Monday assessment, Scotiabank recorded little expected tightening at that meeting but much more for December: “Expectations for this week’s meeting are muted with short-term rates markets only pricing about 2bpts of tightening while December is priced for 22bpts.”

Guidance that sustains expectations of another US increase could support the Dollar even if the UK Budget avoids unsettling investors.

What This Means for GBP/USD

At $1.3347, Pound Sterling is already marginally below the support Scotiabank identified. Continued trading beneath that area would keep the bank’s $1.33 downside scenario relevant, while a recovery above it would reduce the immediate pressure.

The bank still expects modest declines to attract buyers. A credible Budget could help that response, but its own assessment suggests fiscal reassurance is already the prevailing expectation, limiting the case for assuming an automatic rally.

The US decision could therefore determine whether a calm UK outcome is enough to stabilise the pair. Stronger signals for December Fed tightening would test the resilience of the mid-October recovery even without a domestic fiscal surprise.

Our currency coverage draws on live market data, official economic releases and published bank research.

GBP/USD is trading near 1.3333 on the 2-hour chart. After a week stuck between 1.3356 and 1.3407, the pound has slipped below the bottom of that range. Price is now under the faster moving average and resting just above the slower one.

The first support is 1.3295, then 1.3264. The broken 1.3356 floor is now the first resistance, followed by 1.3407.

RSI is near 39, showing mild selling pressure. In my view, the pound has a slight bearish lean below 1.3356, and Wednesday’s Budget could decide the next move. A close below 1.3295 would open 1.3264, while a move back above 1.3356 would favor buyers.

The EURJPY pair began trading sideways with limited movement, as negative signals from the main indicators conflict with the bearish momentum, while the price continues to hold above support at 174.90, resulting in repeated fluctuations around 176.00.

Continued negative pressure, along with repeated stability below the additional resistance level at 177.80, could increase the chances of renewed bearish attempts. The pair is expected to retest current support, with a break below this level opening the door to further declines toward 174.55 and 173.95.

The expected trading range for today is between 175.00 and176.55

Trend forecast: Fluctuating

The EURGBP pair maintained its stability above support at 0.8360, attempting to reduce its losses and begin building a bullish corrective trend. The pair recently targeted 0.8395, but a lack of positive momentum pushed it lower again toward 0.8370.

We emphasize the importance of the price gathering positive momentum to sustain its stability above current support, which will increase the chances of targeting corrective levels starting at 0.8415 and 0.8455. However, a break below support and sustained trading beneath it would force the pair to incur further losses, initially targeting 0.8330.

The expected trading range for today is between 0.8360 and 0.8415

Trend forecast: Bullish

USD/JPY Forecast: MUFG Sets 154.50-158.50 Range for Central-Bank Week

MUFG sees limits to US Dollar gains against the Japanese Yen as central-bank guidance and fragile market confidence shape a volatile week for the pair.

The US-Dollar-to-Japanese-Yen exchange rate rose to 157.47 on Monday, up 0.40%, recovering further from last week’s sharp fall as investors approached decisions from the Federal Reserve and Bank of Japan.

MUFG forecasts a 154.50-158.50 trading range for this week, with renewed market anxiety potentially favouring the Yen even if central-bank messages remain hawkish.

The bank sees difficulty extending gains beyond recent highs above 158.50, rather than an unbreakable ceiling or a longer-term exchange-rate target.

Its caution follows last week’s shift in the pair’s drivers: higher oil prices and US yields initially lifted USD/JPY, before concerns about French finances and technology shares encouraged investors to reduce risk.

Teppei Ino, MUFG’s Tokyo head of global markets research, writes: “Risk aversion spread across financial markets, with equities selling off and bonds rallying, accompanied by dollar selling and yen short-covering.”

Investors closing positions against the Yen must buy it back, giving the currency support that can outweigh the income advantage of holding Dollars.

Monday’s rebound leaves USD/JPY in the upper half of MUFG’s projected range, but still below the area where the bank expects fresh gains to become harder.

Similar central-bank messages may limit the currency response

The Fed’s 27-28 October meeting comes before the BoJ’s 29-30 October meeting, allowing the US announcement to influence the market backdrop facing Japanese policymakers.

MUFG expects both to hold rates, alongside the ECB, after all three raised borrowing costs in September.

Inflation could nevertheless keep the prospect of further tightening alive.

Ino says: “However, inflation remains a concern for all three central banks, so they are likely to maintain a hawkish policy stance and could signal another rate hike in December.”

“If their policy messages remain broadly aligned, the central bank meetings themselves may not generate a significant move in FX markets.”

A hawkish statement from one central bank therefore needs to be judged against what the other delivers, as well as against market expectations.

MUFG regards the Fed outcome as less certain, with stronger inflation keeping speculation about a surprise increase alive.

Against that, senior officials have expressed caution about consecutive hikes, and signs of market instability could discourage another immediate move.

The bank warns that a pause would not rule out a renewed Dollar advance: “Nevertheless, a hawkish overall tone would not be surprising, potentially including dissenting votes in favor of a rate hike or comments from Chair Warsh at the post-meeting press conference pointing to the need for further hikes.”

The BoJ vote could matter as much as a hold

MUFG expects Governor Kazuo Ueda to signal a shift in the inflation assessment: “However, the updated Outlook Report is likely to effectively declare that underlying inflation has reached the BOJ’s 2% price stability target.”

“The normalization of monetary policy pursued since Governor Kazuo Ueda took office could therefore be entering a new phase.”

The September increase to 1.25% passed by seven votes to two, showing that the board was already divided over tightening.

Ino writes: “One risk would be if the two Board members who opposed the September rate hike were to dissent against a hold this time and instead call for a rate cut.”

That is a possible voting outcome, not a prediction that the BoJ will cut rates this week.

Ino warns: “If the BOJ’s reflationist members were nevertheless to call for a rate cut, it would reinforce the Bank’s dovish image and likely prompt yen selling.”

The case for Yen gains without an aggressive Japanese hiking cycle featured in Mizuho’s earlier analysis of US yields.

Writing after last week’s sell-off, Ino argued: “Even if the BOJ meeting triggers yen selling, many market participants would be taking on fresh risk by joining the move. The prevailing risk-off mood in financial markets is likely to deter them from doing so.”

“Renewed yen selling would likely prompt further warnings from the Japanese authorities as well. Fresh yen shorts offer little reward for the exposure involved.”

What This Means for USD/JPY

A Fed message that strengthens expectations of further US hikes, combined with unexpectedly dovish BoJ dissent, would challenge the bank’s view that gains above 158.50 will be difficult to sustain.

For the Yen, renewed selling of riskier assets could matter even without a Japanese rate increase. Last week’s combination of bond buying and the closing of positions against the currency provides MUFG’s basis for watching further deterioration in sentiment as a potential source of Yen demand.

A stable market backdrop and broadly similar guidance from the two central banks would offer less reason for a decisive move. The 154.50-158.50 range describes MUFG’s assessment of that event risk this week, with the direction dependent on both policy surprises and investors’ willingness to keep taking risk.

Created on October 26, 2026

The British pound continues to hover around the 200-Day EMA indicator, an area that a lot of traders will be paying attention to. Furthermore, we are in the middle of the larger trading range.

GBP/USD

The British pound has been somewhat noisy during the trading session here on Friday as we hang around the crucial 200-day EMA. This area will be a natural magnet for price, especially as it is essentially “fair value” over the last year.

It is worth noting that interest rates in America are trying to tick back up, but we will have to wait and see whether or not that plays out. The market has been in a range for quite some time, going all the way back to May 2025 for the most part, and we are close to the middle part of the market.

Neutral market at the moment

The market is likely to continue to see this as a fairly balanced market. With that being the case, I believe this is a market that is probably going to be noisy in this area. But as things stand right now, unless the U.S. dollar suddenly takes off against everything, I think short-term pullbacks could be buying opportunities.

After all, the British pound has for some time done better against the U.S. dollar than many other currencies, with maybe the exception of the Australian dollar. It has kind of been behaving the same way as well.

With this, I think buying on the dip makes sense, but to come in and get involved right here is probably a bit of a stretch. At this point, as we are finally balanced, we see a lot of noise. The market is coiling in the same place it coiled just a couple of weeks ago, so we will have to wait and see until we get an impulsive candlestick. It is difficult to follow.

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Christopher Lewis is a technical analyst and market commentator at DailyForex with more than two decades of trading experience in Forex and other leveraged markets. Based in Columbus, Ohio, he specializes in chart-based analysis of major currency pairs, stock indices, commodities, and energy markets, focusing on clear support and resistance levels, trend structure, and risk management. Christopher produces daily written and video analysis for traders who rely on technical setups to navigate volatile market conditions

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

The U.S. dollar is really starting to flex its muscles against the Japanese yen over the last couple of days. That being said, it’s worth noting that we’re at the bottom of a consolidation area, with the ¥156.50 level being a bit of a floor. I still like the idea of buying short-term dips here, especially if the Federal Reserve on Wednesday ends up being relatively tight with its statement—hawkish, I should say.

The market continues to be one that waits for central banks, and of course, the Bank of Japan has an interest rate decision and statement on Friday. So, there’s that as well. Ultimately, though, I do think the Japanese are likely to do nothing. The Americans are probably going to sound a little bit more hawkish, so I do favor the upside. Traders get paid to hang on to this pair.

Support, where buyers tend to step in, is 101.60, then 100.87. Resistance, where sellers tend to step in, is 102.00, then 102.43.

RSI, which measures the strength of recent buying and selling, is around 46, which is neutral. My bias stays neutral while DXY trades between 101.60 and 102.00. A close below 101.60 would favor sellers, while a move above 102.00 would favor buyers.

EUR/USD Technical Analysis: Euro Holds 1.1189 Inside Triangle as 1.1257 Comes Into Focus

The pair maintained its stability above the support level at 174.90, resisting negative pressure and forming upward corrective waves that brought it to around 176.05. The price may continue its corrective trading, but repeated stability below the additional resistance barrier near 177.80 prompts us to maintain our bearish outlook.

We expect the pair to renew its attempts to test the 174.90 level. A break below this support would open the way for further declines toward 174.55 and 173.95.

The expected trading range for today is between 175.00 and 176.55

Trend forecast: Fluctuating

– Written by


Frank Davies

STORY LINK Pound to Dollar Forecast: AI Sell-Off Tests Dollar as GBP/USD Nears 1.34

The Pound to Dollar exchange rate (GBP/USD) held close to five-week highs around 1.3380 after briefly climbing above 1.3410, as renewed concerns over AI stocks undermined the Dollar’s traditional safe-haven appeal.

Pound Sterling remains supported by expectations of a November Bank of England rate hike, while falling US Treasury yields and reduced Federal Reserve tightening bets have limited Dollar demand.

GBP/USD Forecasts: Holds near Five-Week Highs

The Pound to Dollar (GBP/USD) exchange rate remained close to five-week highs at the end of the week after Sterling briefly climbed above 1.3410 before easing back towards 1.3380.

GBP/USD reached around 1.3418 on Thursday, its strongest level since mid-September, as the Dollar struggled to benefit from a sharp deterioration in global risk appetite.

According to MUFG; “The US has underperformed again overnight alongside the sell-off in Asian equity markets highlighting again that it is now trading more like a risk currency than a safe haven.”

UoB has identified scope for GBP/USD gains towards 1.3440, while Scotiabank remains constructive on the broader technical picture and sees potential for a move back towards the 1.3650/75 area.

AI Jitters Challenge Dollar Safe-Haven Demand

Global risk conditions dominated trading during the second half of the week as another sell-off in technology shares increased doubts over the sustainability of the artificial-intelligence investment boom.

The Japanese Yen and Swiss Franc attracted the strongest defensive demand, while the Dollar failed to perform as reliably as a traditional safe haven.

US Treasury yields fell sharply as investors moved into government bonds and reduced expectations for further Federal Reserve tightening.

Chris Scicluna, head of economic research at Daiwa Capital Markets commented; “AI is making people nervous, as is oil and as is France, and obviously we have a slight degree of risk aversion in the market, which is benefiting Treasuries, marginally benefiting gilts, and obviously did so for JGBs overnight.”

ING noted that investors appear to be reducing exposure to technology shares and rotating towards more defensive sectors.

The bank commented; “The suspicion now is that global equity investors are starting to scale back their exposure to the tech sector and looking for more defensive plays in sectors like consumer staples, healthcare and utilities.”

It added that this trend could favour greater allocation towards European equities, where major indices have a lower technology weighting.

MUFG also highlighted the changing Dollar dynamic; “The US dollar has lost upward momentum amidst more risk-off trading conditions over the past week undermined in part by the paring back of investor optimism towards AI-related investments, and the scaling back of Fed rate hike expectations.”

BoE Expectations Continue to Support Sterling

Sterling has remained relatively resilient as markets continue to expect a Bank of England rate increase in November.

September UK inflation rose to 3.5%, while recent labour-market and business-activity data have strengthened the view that the economy can withstand somewhat tighter policy.

Friday’s flash UK composite PMI increased to 53.1 from 52.0 in September, comfortably beating expectations and reinforcing the picture of relatively resilient activity.

Markets are therefore close to fully pricing a 25-basis-point November increase and expect further tightening during 2027.

The Dollar side remains more uncertain.

A Reuters poll published this week found almost all economists expect the Federal Reserve to leave rates unchanged at its October meeting, with the next hike expected in December.

ING nevertheless cautioned against assuming broad Dollar weakness while US short-term yields remain elevated; “But until the rock-solid short-end of the US yield curve starts to buckle, it is hard to make the case that the dollar needs to fall across the board.”

Danske Bank also sees energy prices as an important source of Dollar support, with high oil and gas costs creating both inflation and growth risks for energy-importing economies.

For GBP/USD, the 1.3415-1.3440 area remains the immediate upside barrier.

A sustained break above this region would strengthen the case for a move towards 1.3500 and eventually Scotiabank’s 1.3650/75 target area.

On the downside, 1.3330-1.3350 should provide initial support.

For now, the Pound retains support from BoE tightening expectations, while the Dollar’s ability to benefit from renewed risk aversion remains an important test for the pair

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