The dollar to Yen (USD/JPY) exchange rate strengthened to highs near 158.5 at the start of the week, maintaining pressure on the Japanese currency after another rise in US Treasury yields.

MUFG notes that the yen remains vulnerable in the short term, especially with energy prices rising again and global bond markets under renewed pressure.

The bank expects yield differentials to remain an important driver, particularly as markets continue scaling back expectations for Federal Reserve rate cuts.

In this context, MUFG expects USD/JPY to remain close to the upper end of its recent range, with the bank targeting a 157.00–160.00 range in the short term.

“Fundamental factors continue to favour further yen weakness and will keep pressure on Japan to intervene again to support the yen as the USD/JPY moves back closer to the 160.00-level.”

MUFG also notes that Japan’s fiscal position is attracting increased scrutiny following discussion of another supplementary budget package and rising long-dated Japanese government bond yields.

The bank considers that higher oil prices are an additional negative for the yen given Japan’s dependence on imported energy.

At the same time, volatility could increase sharply if markets begin testing the Japanese authorities’ tolerance for renewed yen weakness.

The bank still sees scope for periods of yen recovery over the medium term, particularly if geopolitical tensions intensify further or US economic data starts to weaken more materially.

In the short term, however, MUFG considers that the balance of risks still favours a higher USD/JPY pair.

– Written by


Frank Davies

STORY LINK GBP/USD Forecast: Pound Sterling Recovers as UK Bond Markets Stabilise

The Pound US Dollar (GBP/USD) exchange rate strengthened on Monday, clawing back some of last week’s losses as UK political concerns began to ease and British bond markets stabilised.

At the time of writing, GBP/USD was trading at $1.3393, up around 0.5% on the day.

The Pound (GBP) climbed on Monday as investors appeared to take a calmer view of the UK’s political backdrop.

Pound Sterling had been knocked last week by mounting speculation over Prime Minister Keir Starmer’s position, with the uncertainty spilling into the bond market and sending UK borrowing costs sharply higher.

However, the mood improved at the start of the week as fears of an imminent leadership challenge began to recede.

Further reassurance came from Andy Burnham, seen as a potential challenger, after he suggested that he would maintain the government’s current fiscal rules if he became Prime Minister.

His comments helped cool concerns around the UK’s fiscal outlook, allowing gilt yields to pull back from their recent near-18-year highs and easing a key source of pressure on the Pound.

GBP also found some support from the IMF’s latest UK growth upgrade. The fund lifted its 2026 forecast from 0.8% to 1%, citing the economy’s ‘strong pre-war momentum’.

With political nerves easing and borrowing costs retreating, Sterling was able to regain some of the ground lost during last week’s volatility.

Meanwhile, the US Dollar (USD) weakened on Monday as investors locked in gains following the currency’s strong run last week, which had carried USD to multi-week highs.

The safe-haven ‘Greenback’ also struggled to attract much fresh demand amid an uneven market mood.

Ongoing attacks in the Middle East kept investors cautious, preventing a stronger risk-on rally. However, tentative optimism over a potential US-Iran peace deal helped curb demand for safer assets.

As a result, the US Dollar lost ground as traders trimmed positions after last week’s advance.

Near-Term GBP/USD Forecast: UK Labour Data to Lift the Pound?

Looking ahead, the Pound could be driven by the UK’s latest labour market figures on Tuesday.

Economists expect unemployment to have held at 4.9% in the three months to March, pointing to a broadly unchanged jobs market. Wage growth is also forecast to remain steady, while employment is expected to rise by 107,000.

If the figures print in line with expectations, signs of resilience in the UK labour market could reinforce the view that the Bank of England (BoE) may need to raise interest rates.

Later in the session, comments from BoE Deputy Governor Sarah Breeden may also influence GBP. A hawkish tone from Breeden could help the Pound extend its gains.

For the US Dollar, the latest ADP weekly employment change figure may attract attention as investors look for fresh signals on the strength of the US jobs market.

Meanwhile, risk sentiment could remain a key driver of the ‘Greenback’. Any further developments in the Middle East may trigger volatility, particularly if they shift demand for safe-haven currencies.

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TAGS: Pound Dollar Forecasts

– Written by


Frank Davies

STORY LINK GBP/USD Forecast: Pound Sterling Recovers as UK Bond Markets Stabilise

The Pound US Dollar (GBP/USD) exchange rate strengthened on Monday, clawing back some of last week’s losses as UK political concerns began to ease and British bond markets stabilised.

At the time of writing, GBP/USD was trading at $1.3393, up around 0.5% on the day.

The Pound (GBP) climbed on Monday as investors appeared to take a calmer view of the UK’s political backdrop.

Pound Sterling had been knocked last week by mounting speculation over Prime Minister Keir Starmer’s position, with the uncertainty spilling into the bond market and sending UK borrowing costs sharply higher.

However, the mood improved at the start of the week as fears of an imminent leadership challenge began to recede.

Further reassurance came from Andy Burnham, seen as a potential challenger, after he suggested that he would maintain the government’s current fiscal rules if he became Prime Minister.

His comments helped cool concerns around the UK’s fiscal outlook, allowing gilt yields to pull back from their recent near-18-year highs and easing a key source of pressure on the Pound.

GBP also found some support from the IMF’s latest UK growth upgrade. The fund lifted its 2026 forecast from 0.8% to 1%, citing the economy’s ‘strong pre-war momentum’.

With political nerves easing and borrowing costs retreating, Sterling was able to regain some of the ground lost during last week’s volatility.

Meanwhile, the US Dollar (USD) weakened on Monday as investors locked in gains following the currency’s strong run last week, which had carried USD to multi-week highs.

The safe-haven ‘Greenback’ also struggled to attract much fresh demand amid an uneven market mood.

Ongoing attacks in the Middle East kept investors cautious, preventing a stronger risk-on rally. However, tentative optimism over a potential US-Iran peace deal helped curb demand for safer assets.

As a result, the US Dollar lost ground as traders trimmed positions after last week’s advance.

Near-Term GBP/USD Forecast: UK Labour Data to Lift the Pound?

Looking ahead, the Pound could be driven by the UK’s latest labour market figures on Tuesday.

Economists expect unemployment to have held at 4.9% in the three months to March, pointing to a broadly unchanged jobs market. Wage growth is also forecast to remain steady, while employment is expected to rise by 107,000.

If the figures print in line with expectations, signs of resilience in the UK labour market could reinforce the view that the Bank of England (BoE) may need to raise interest rates.

Later in the session, comments from BoE Deputy Governor Sarah Breeden may also influence GBP. A hawkish tone from Breeden could help the Pound extend its gains.

For the US Dollar, the latest ADP weekly employment change figure may attract attention as investors look for fresh signals on the strength of the US jobs market.

Meanwhile, risk sentiment could remain a key driver of the ‘Greenback’. Any further developments in the Middle East may trigger volatility, particularly if they shift demand for safe-haven currencies.

Like this piece? Please share with your friends and colleagues:

International Money Transfer? Ask our resident FX expert a money transfer question or try John’s new, free, no-obligation personal service! ,where he helps every step of the way,
ensuring you get the best exchange rates on your currency requirements.

TAGS: Pound Dollar Forecasts

The Euro (EUR) strengthened against Pound Sterling (GBP) after renewed speculation surrounding Prime Minister Keir Starmer’s future added to concerns over UK political stability and the outlook for the British currency.

Currency analysts at Rabobank said Pound Sterling remains heavily driven by headlines surrounding Starmer’s leadership battle, warning that prolonged political uncertainty could push EUR/GBP higher over the coming year.

GBP initially recovered some ground during early European trade, but Rabobank said the rebound quickly faded as investors reassessed mounting tensions inside the Labour Party.

“The currency clearly remains beholden to news regarding the future of PM Starmer’s leadership,” Rabobank said.

Markets briefly stabilised after Starmer survived another night without a formal leadership challenge, although pressure on the Prime Minister intensified sharply earlier this week.

Rabobank noted that more than 80 Labour MPs have reportedly called on Starmer to resign, while four ministers quit the government yesterday.

The bank said reports suggesting Health Secretary Wes Streeting could resign and launch a leadership challenge “as soon as tomorrow” were adding further uncertainty for investors.

While Labour Party rules make removing an incumbent leader difficult, Rabobank warned the scale of internal divisions points to the risk of “a prolonged period of messy UK politics”.

“This hints at the possibility of a prolonged period of messy UK politics – something that the Labour party had promised to put a stop to,” the bank said.

UK Gilt Market Concerns Returning

Rabobank said political instability is increasingly spilling into UK financial markets, particularly the gilt market.

Although long-dated UK bond yields briefly steadied this morning, the bank warned further volatility remains likely if uncertainty drags on.

“Any wobble in the long end would also leave the currency vulnerable,” Rabobank said.

Investors are also reassessing Bank of England rate expectations.

Through March and April, Sterling was supported by a sharp repricing in UK interest rates as markets swung from expecting cuts to pricing multiple hikes following the Iran-driven energy shock.

However, Rabobank believes current pricing has become too aggressive.

“Currently the market is priced for three 25bp rate hikes on a one-year view. That said, in Rabo’s view this is too aggressive,” the bank said.

Rabobank argued that softer labour market conditions and growing spare capacity in the UK economy should ultimately limit the need for aggressive Bank of England tightening.

“A re-pricing in favour of one rate hike could weigh on the pound,” analysts added.

EUR/GBP Forecast: Rabobank Targets 0.89 as Pound Sterling Risks Grow

Rabobank continues to forecast the Euro to Pound exchange rate moving towards 0.89 over a 12-month horizon, implying broader Sterling weakness ahead.

The bank warned the UK’s large current account deficit leaves the Pound particularly exposed if political uncertainty combines with renewed gilt market stress or weaker growth expectations later this year.

The US dollar has rallied a little bit against the Japanese Yen, but we are getting a little bit stretched here. What I would like to see is a little bit of a pullback in order to find value so that we can take advantage of any cheap dollars that we can find.

The 50-day EMA sits just above the 150-yen level, and it is an area that I think will continue to be important—a little bit of a floor, if you will. Above, we have the 160-yen level, an area that I think a lot of people will have to watch closely due to the fact that we had seen the Bank of Japan intervene in that general vicinity. That being said, this is a situation I think you’re looking to buy dips, taking advantage of the interest rate differential and any value you can find.

GBP/USD Technical Analysis

• The Euro fell on Friday as interest rates in the United States continued to climb.

• That being said, interest rates in Germany have climbed as well, but really at this point I think a lot of traders are starting to get very nervous about this situation in the Middle East where traders have to wait for the next headline to determine whether or not there is any progress being made in the idea of finding peace.

I don’t see a lot of progress and sooner or later you have to worry about inflation via energy. Europe is in a much more vulnerable position than the United States is due to self-imposed green regulations and a moratorium on drilling of a lot of its resources. So, with that being the case, a lack of natural gas and crude oil is a toxic situation for Europe.

Vulnerability and support levels

If we bounce from here, which happens to be the 200-day EMA, it offers a short-term opportunity for those who might be willing to fade the selling pressure, but quite frankly I would prefer to see a bounce and signs of exhaustion that I can start shorting again.

I do believe that the EUR/USD pair is going to stay in the range it’s been in for some time and, for what it’s worth, the Euro is basically at the same price it was when it was introduced in 1990. In other words, with all the noise that we’ve had over the last couple of decades, it really hasn’t gone anywhere; it is worth the same as it was back then.

If we break down below the 200-day EMA we could go down to the 1.14 level, which I see as a massive support level, but I also recognize that the 1.15 level probably offers support as well. Rallies look suspicious to me at this point in time.

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 GBPJPY pair continued forming repeated negative trading, to confirm its surrender to the previously suggested bearish scenario by reaching 211.20, to form sideways fluctuating due to the contradiction of the main indicators to settle near 211.65.

Note that the stability below 213.50 barrier confirms the trading confinement within the bearish track in the upcoming trading, therefore, we will keep waiting for gathering extra negative momentum, to ease the mission of targeting 211.00 level, to attack 210.45 support, forming confirmation key for the upcoming trading.

The expected trading range for today is between 210.45 and 212.30

Trend forecast: Bearish

BitcoinWorld

EUR/GBP Price Forecast: Euro Remains Vulnerable Below 0.8640 – Critical Support Test

The EUR/GBP price forecast indicates that the euro remains vulnerable below the key psychological level of 0.8640. As of [current date], the pair trades near 0.8615, reflecting persistent selling pressure. This analysis provides an in-depth technical and fundamental outlook for traders and investors.

EUR/GBP Price Forecast: Technical Breakdown Below 0.8640

The EUR/GBP price forecast hinges on the critical support zone at 0.8640. A sustained break below this level opens the door for a move toward 0.8580, the next major support. The pair has formed a series of lower highs since mid-January, confirming a bearish trend. The 50-day moving average now acts as resistance near 0.8700.

Key technical indicators support the bearish outlook:

• Relative Strength Index (RSI): Below 40, indicating bearish momentum.
• MACD: Below its signal line, with negative histogram bars.
• Bollinger Bands: Price hugging the lower band, suggesting sustained selling.

Volume analysis shows increased selling on breakdown attempts. This confirms trader conviction in the downside move. A daily close below 0.8640 would validate the EUR/GBP price forecast for further losses.

Fundamental Drivers Behind Euro Vulnerability

Several fundamental factors underpin the euro’s weakness against the pound. The European Central Bank (ECB) maintains a dovish stance, while the Bank of England (BoE) signals caution. Interest rate differentials favor the pound.

Key fundamental catalysts include:

• ECB policy: Expected to cut rates in June, weighing on the euro.
• UK economic resilience: Stronger-than-expected GDP data supports the pound.
• Political uncertainty: French elections and German coalition talks add risk premium to the euro.

These factors create a persistent headwind for the euro. The EUR/GBP price forecast reflects this fundamental divergence.

Impact of Interest Rate Differentials

The interest rate gap between the eurozone and the UK currently favors the pound. The BoE holds rates at 5.25%, while the ECB’s deposit rate stands at 4.00%. This 125-basis-point differential attracts capital flows into sterling-denominated assets.

Market pricing for future rate cuts amplifies this divergence. Traders expect the ECB to cut by 75 basis points in 2025. In contrast, the BoE may only deliver 50 basis points of cuts. This expectation keeps the euro under pressure.

EUR/GBP Support and Resistance Levels to Watch

Identifying key EUR/GBP support and resistance levels is crucial for trading decisions. The following table outlines the most important price zones:

A break below 0.8580 would confirm the bearish EUR/GBP price forecast. Conversely, a move above 0.8700 would signal a potential reversal.

Expert Analysis and Market Sentiment

Market analysts remain bearish on the euro. A recent survey of 30 currency strategists shows 70% expect EUR/GBP to trade below 0.8600 in the next month. This consensus reinforces the technical outlook.

Key expert observations include:

• Jane Foley, Rabobank: “The euro lacks catalysts for a sustained recovery.”
• Lee Hardman, MUFG: “GBP strength is a function of relative economic performance.”
• ING analysts: “The 0.8640 level is the line in the sand for euro bulls.”

These expert views align with the technical analysis. The EUR/GBP price forecast remains tilted to the downside.

Timeline and Potential Scenarios

The next two weeks are critical for the pair. Key events that could influence the EUR/GBP price forecast include:

• ECB meeting minutes: Release expected next Thursday, may reinforce dovish bias.
• UK inflation data: Due next Wednesday, could impact BoE rate expectations.
• Eurozone PMI data: Friday’s release will gauge economic health.

Two primary scenarios exist:

Scenario 1 (Bearish): A break below 0.8580 targets 0.8520. This requires continued UK economic outperformance and ECB dovishness.

Scenario 2 (Neutral): Consolidation between 0.8580 and 0.8640. This would occur if data releases are mixed.

The bearish scenario has a 60% probability, according to current market pricing.

Conclusion

The EUR/GBP price forecast clearly shows the euro remains vulnerable below 0.8640. Technical indicators, fundamental drivers, and market sentiment all point to further downside. Traders should watch the 0.8580 support level closely. A break below this level would confirm the bearish outlook and target 0.8520. Conversely, a move above 0.8700 would invalidate the bearish thesis. For now, the path of least resistance is lower.

FAQs

Q1: What is the EUR/GBP price forecast for the next week?
The EUR/GBP price forecast suggests continued vulnerability below 0.8640, with a potential test of 0.8580 support.

Q2: Why is the euro weak against the pound?
The euro is weak due to ECB dovishness, UK economic resilience, and interest rate differentials favoring the pound.

Q3: What are the key support and resistance levels for EUR/GBP?
Key support is at 0.8640 and 0.8580. Resistance is at 0.8700 and 0.8760.

Q4: How does ECB policy affect the EUR/GBP forecast?
ECB policy, including expected rate cuts, weakens the euro and supports the bearish EUR/GBP price forecast.

Q5: What technical indicators confirm the bearish outlook?
The RSI below 40, MACD below signal line, and price hugging the lower Bollinger Band confirm bearish momentum.

This post EUR/GBP Price Forecast: Euro Remains Vulnerable Below 0.8640 – Critical Support Test first appeared on BitcoinWorld.

Exchange Rates UK Research’s latest May 2026 survey of major investment banks shows the USD/JPY exchange rate is expected to gradually decline from current levels near 159.00 towards the 145–150 region through 2027, signalling expectations for a broader Japanese yen recovery after several years of sustained weakness.

The latest poll also suggests banks increasingly believe the peak in USD/JPY may already have passed, although most institutions still expect the pair to remain historically elevated compared with pre-2022 levels.

Latest Survey Signals Gradual USD/JPY Decline

The majority of forecasts in the latest Exchange Rates UK Research poll point towards a steady decline in USD/JPY over the coming quarters.

Banks including Citi, RBC Capital Markets, Scotiabank and Rabobank all expect the pair to move below 150 during 2027, while some forecasts extend towards the low-140s longer term.

Even institutions that remain more constructive on the US dollar, such as Goldman Sachs and CIBC, still project USD/JPY drifting lower from current levels.

Overall, the survey suggests banks increasingly expect the Japanese yen to regain some ground after a prolonged period of depreciation.

That outlook follows a remarkable multi-year rise in USD/JPY.

The pair traded below 130 as recently as 2022 before surging above 160 during 2025 and 2026 as widening interest rate differentials heavily favoured the US dollar.

Although USD/JPY remains close to multi-decade highs, recent price action suggests momentum has started to slow. April saw the pair retreat from above 160 towards the mid-150s before rebounding modestly during May.

Bank of Japan Policy Shift Remains Central Theme

The latest survey highlights how heavily the USD/JPY outlook continues to depend on monetary policy divergence between the Federal Reserve and Bank of Japan.

For several years, ultra-low Japanese interest rates encouraged investors to fund trades in yen and buy higher-yielding assets elsewhere, contributing to sustained yen weakness.

However, markets increasingly expect the Bank of Japan to continue gradually normalising policy after ending negative interest rates last year.

At the same time, investors are beginning to anticipate a slower US economy and eventual Federal Reserve rate cuts during 2026 and 2027.

That combination has started to narrow yield differentials slightly, helping stabilise the yen after years of sharp losses.

Markets also remain highly sensitive to the risk of Japanese government intervention whenever USD/JPY approaches or moves above the 160 level, which has helped limit further upside in recent months.

USD/JPY Outlook: Banks Expect Yen Recovery, But Dollar-Yen to Stay Historically High

The latest Exchange Rates UK Research survey suggests the broader trend in USD/JPY is gradually turning lower, with most banks expecting further yen recovery through 2026 and 2027.

However, forecasts still remain well above historical averages.

Even many of the more bearish USD/JPY projections imply the pair will remain significantly above the 110–130 trading ranges that dominated before the global inflation and interest rate cycle began.

For now, the survey points to gradual yen appreciation rather than a rapid reversal.

But with markets increasingly focused on Bank of Japan policy normalisation and the possibility of eventual US rate cuts, sentiment towards the yen appears to be improving for the first time in several years.