– Written by


Frank Davies

STORY LINK British Pound to Dollar Forecast: BoE Easing Outlook to Cap GBP/USD Gains

The Pound to Dollar (GBP/USD) exchange rate recovered modestly to around 1.3165 after testing six-month lows near 1.30, but upside momentum remains fragile as investors weigh the growing risk of a December Bank of England rate cut.

GBP/USD Forecasts: December BoE cut?

Credit Agricole now forecasts that the Pound to Dollar (GBP/USD) exchange rate will be held to 1.32 by the end of 2026.

Rabobank has a 12-month forecast of 1.35.

GBP/USD dipped sharply to 6-month lows at 1.3000 during the week before a recovery to 1.3165 as the dollar retraced gains.

Credit Agricole commented; “We revise down our GBP forecasts for a second time this year because downside risks to the UK growth outlook have intensified further and fuelled expectations of more aggressive BoE easing from here, in a blow to the GBP across the board.”

The Bank of England held interest rates at 4.00%, but there was a dovish vote split and comments from Governor Bailey suggested that he will back a cut in December once the budget has been delivered.

Danske Bank commented; “We now expect the BoE to deliver the next cut in the Bank Rate in December, where we also think fresh government spending cuts will call for further easing.”

The bank, however, expects only one further cut next year; “we expect the April meeting to conclude the easing cycle with the Bank Rate at 3.50%.”

Rabobank notes the dovish shift and hints from Bailey that he would back a cut next month. The bank is still hesitant to bring forward the call for the next rate cut from February to December.

It did, however, add; “if the Budget delivers front-loaded and meaningful consolidation, it could strengthen the MPC’s confidence that rates can be cut further. That, in turn, could prompt us to revise our forecast and bring the next cut forward to December.”

The US labour-market data was mixed during the week.

ADP reported an increase in private payrolls of 42,000 for October following a revised 29,000 decline the previous month.

Challenger, however, reported a surge in layoffs for October with an increase of 175% from the previous year.

The government shutdown continued which increased uncertainty over the current situation and triggered fresh reservations over the outlook, both factors undermining the dollar.

Investment banks are increasingly uncertain over the outlook amid the lack of official data.

Rabobank commented; “Clearly it is difficult for Fed officials and the market to form strong opinions on how the US economy is developing given the near absence of fresh, official US data. That said, Powell’s remark at his October press conference that he does not see the weakening in the labour market accelerating is a warning to USD bears.”

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TAGS: Pound Dollar Forecasts

Capitol Hill in the Spotlight

While the BoJ Summary of Opinions gave insights into the conditions needed for a rate hike, developments on Capitol Hill will also influence USD/JPY trends. Reports of lawmakers nearing an agreement on a federal budget lifted demand for the US dollar.

The Kobeissi Letter commented on the US Senate impasse nearing an end, stating:

“US Congress is reportedly close to reaching a deal to reopen the government after Senate Democrats signaled they are ready to back a bipartisan proposal. At least 10 Democrats are expected to support advancing a spending and short-term funding bill.”

The Kobeissi Letter added:

“A short-term funding bill is now expected to receive enough support to reopen the US government through January 31st. The measure would provide full-year funding for SNAP and Veterans Affairs.”

USD/JPY rose 0.25% to 153.796 in early trading on Monday, November 10. A reopening would limit the shutdown’s impact on the US economy. Furthermore, a reopening could expedite the release of key inflation and labor market data ahead of the Fed’s December interest rate decision. The data would provide FOMC members with the necessary information to make an informed policy decision.

Fed Speakers to Fuel Fed Rate Cut Speculation

While market focus will be on Capitol Hill, traders should closely monitor FOMC members’ speeches. Views on inflation, the labor market, and the economic outlook will influence sentiment toward the Fed rate path.

According to the CME FedWatch Tool, the chances of a Fed rate cut in December were finely balanced, rising from 63.0% on October 31 to 66.9% on November 7. Growing support for further monetary policy easing could push USD/JPY toward 153. On the other hand, calls to delay a cut over concerns about elevated inflation may send the pair toward 155.

Despite the potential boost from a US government reopening, the near-term USD/JPY outlook remains bearish. Weakening US labor market data may put pressure on the Fed to consider further policy easing, weighing on demand for the US dollar.

USD/JPY Scenarios: Diverging Monetary Policies

• Bearish USD/JPY Scenario: Hawkish BoJ commentary, intervention warnings, and dovish Fed rhetoric could push USD/JPY toward 153.
• Bullish USD/JPY Scenario: Dovish BoJ cues and hawkish Fed comments could send USD/JPY toward 155.

The dollar started strong this week, but couldn’t hold its ground, and that shift is setting up some interesting moves across the majors.

In today’s video, I’ll break down what I’m watching on the DXY, EURUSD, GBPUSD, USDCHF, and XAUUSD — including the key levels I’m eyeing for next week’s setups.

US Dollar Index (DXY) Forecast

The US dollar started the week with a rally, but buyers struggled to break through the 100.25 resistance, as anticipated.

The 100.25 August high was significant, and the unfinished auction made a sweep and rejection more likely.

Thursday’s session closed below the November open, which flipped to resistance on Friday.

So far, we’re seeing DXY sellers follow through on Thursday’s breakdown, with all eyes on 99.30.

I’ve discussed the two single prints in the 99.30 region since the October 30th rally. Inefficiencies like this are often revisited by markets.

What will be interesting is how the DXY handles the inefficiencies at 99.30, considering the 99.40 support is just above those.

A sweep below 99.40 and into 99.30 could offer some short-term relief, but it would have to be confirmed by buyers. That’s yet to be seen.

Below 99.40 is the 98.40 inefficiency. If traders are looking for a place for the dollar to bounce, that’s it.

Until then, I’ll be looking to sell rallies from the USD.

EURUSD Forecast

EURUSD signaled a bullish shift in momentum on Wednesday, as I noted in the VIP Discord group at the time.

That structure break opened the door to the November open at 1.1540 and key resistance at 1.1555.

The EURUSD struggled a bit there on Thursday, but a bullish reclaim seemed likely given the price action.

Fast forward to Friday, and EURUSD is basing above 1.1555. That will be significant going into next week if euro bulls can hold Friday’s rally.

The impulse above 1.1555 opens up the September low at 1.1608. We also have a buy-side single print at 1.1595 that could pull the price higher.

As for longs, I’d need to see a pullback into 1.1540/50 to fill Friday’s sell-side inefficiency and offer a favorable risk-to-reward ratio.

Provided the EURUSD rally holds on Friday, key support next week is at 1.1540/50, with resistance in the 1.1600 region.

GBPUSD Forecast

GBPUSD is also reclaiming a significant area on Friday.

The pair fell below its range lows to start the week, but bulls quickly pushed the market back to 1.3140.

We also have the November open at 1.3130, adding to the significance of the area.

I mentioned to VIP members on Thursday that they should anticipate a bullish move on Friday. Immediate retests like this are often early signs of a reversal.

The confirmation is whether GBPUSD bulls can hold Friday’s session convincingly above 1.3140.

Do that, and I like the idea of looking for longs on pullbacks next week.

Several buy-side unfinished auctions could serve as targets this month. Those include 1.3217 and 1.3280, as well as the September low at 1.3324.

Alternatively, if Friday fails to hold above 1.3140, I’ll stand aside next week and wait for more structure.

USDCHF Forecast

USDCHF is rotating lower from its 0.8100 range resistance. The weekly time frame has been incredibly clean for years, and shows this 0.8100 area the best.

Similar to the DXY, we have sellers taking over this week. In the case of USDCHF, the break below 0.8060 shifts the momentum in favor of sellers.

Support comes in at 0.8038. But also like the DXY, I wouldn’t be surprised to see a sweep of 0.8038 and some relief from the 0.8030 region.

However, with the overall structure shifting bearish, rallies could be for shorting.

As for targets, the 0.7950 area is appealing. We have a sell-side single print there and an unfinished auction at 0.7926.

Gold (XAUUSD) Forecast

Gold has been stuck in a tight sideways range since late October. It’s natural for a market to spend time exchanging hands after a liquidity event, such as the one we saw in mid-October.

As mentioned earlier in the week, the $4,030-$4,060 area is the line in the sand. That’s my trigger for a long.

Without a convincing close above $4,060, there isn’t much to do, as that’s required to confirm a bullish shift following the October cascade.

Furthermore, the potential for sell-side liquidity sweeps exists while XAUUSD is below the $4,060 range highs.

For that reason alone, trying to buy gold here is risky and ill-advised.

We’ve had the sell-side liquidity event; now we need buyers to show their hand and shift momentum from neutral to bullish. The $4,060 level is the hinge for that shift in momentum.

If buyers force a break of $4,060, my targets will include $4,150, $4,242, and the $4,300 area.

And if they can’t, I’ll stand aside and wait for a better opportunity.

• The GBP/USD weekly forecast remains mildly bullish as the US dollar weakens on a continued US government shutdown. 
• The central bank is likely to move towards further easing, while the Fed stays data-dependent. 
• Traders await GBP manufacturing and average earnings reports, along with the US consumer price index and retail sales the next week. 

The GBP/USD weekly forecast tilts slightly up after paring BOE-led losses on Friday, closing above the 1.3150 level. The move stemmed from the US major data blackout amid a continued government shutdown. 

As the Bank of England kept the rates unchanged at 4%, it came along with a readiness, instead of the previous cautiousness, to resume rate cuts from the December meeting. MPC members’ vote revealed a 5-4 split, with the Deputy Governor Sarah Breeden also favoring the majority for a 25 bps rate cut, highlighting the growing concerns about the UK’s sluggish growth and cooling inflation. 

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The BoE also emphasized that the CPI figures have already found a top and is poised for further slowdown. Markets now price in a 70% chance of one December cut and a probability of 50 bps easing in the next year. 

On the other hand, the greenback regained renewed strength amid resilient labor data and moderate disinflation. However, the Dollar Index (DXY) reached a six-month high near 100.36 this week before slipping to 99.45 by Friday. Fed’s Jefferson noted that the central bank should gradually proceed with further easing as the policy approaches a neutral rate and should decide further moves based on the upcoming economic data. 

According to CNN, Kevin Hassett, the White House economic advisor, noted that the economy is in jeopardy because of the current shutdown, anticipating a contraction of 1-1.5% in GDP growth this quarter. The shutdown has obstructed key data releases, causing limited visibility in the markets, with investors shifting to secondary data sources for near-term market clues. 

The UoM Consumer Sentiment revealed that the consumer sentiment slipped to 50.3 from 53.6 in October. Together, these developments weigh on the greenback and limit the dollar’s further upside. 

GBP/USD Key Events Next Week

The significant events in the coming week include:

• GBP Average Earnings Including Bonus (3Mo/Yr)
• GBP Average Earnings Excluding Bonus (3Mo/Yr)
• GBP ILO Unemployment Rate (3M)
• GBP Manufacturing Production (MoM)
• GBP Gross Domestic Product (MoM)
• US Consumer Price Index ex Food and Energy (MoM)
• US Consumer Price Index ex Food and Energy (YoY)
• US Consumer Price Index (YoY)
• US Consumer Price Index (MoM)
• US Retail Sales (MoM)
• US Producer Price Index (MoM)

Next week, US inflation data remains the key driver. However, it is important to see whether the data will be released or not. Continued weakness in CPI reading could prompt the Fed to cut further in the December meeting. 

GBP/USD Weekly Technical Forecast: Weak Recovery Attempt Capped by 1.3180

The GBP/USD daily chart shows a corrective rebound from 1.3020 up to 1.3180 before closing the week near 1.3150. The price remains well below the 50-, 100-, and 200-day MAs, reflecting sellers’ dominance. Meanwhile, 100- and 200 MAs are looking to form a bearish crossover. 

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The RSI is near 40, indicating limited upside strength. A sustained move above 1.3180 could extend gains towards 1.3260 and 1.3340. Conversely, a drop below 1.3100 could intensify the selling pressure and trigger a downside towards 1.3000 and 1.2890. 

Support Levels

Resistance Levels

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– Written by


Ben Hughes

STORY LINK Euro to Dollar Forecast: EUR/USD Nears 1.16 on US Job Market Worries

The Euro to Dollar (EUR/USD) exchange rate rebounded strongly above 1.15 after disappointing US jobs figures triggered renewed selling in the dollar.

ING analysts suggest a key low may have formed near 1.1470, though analysts warn that confirmation will depend on further clarity over the US labour market.

EUR/USD Forecasts: 1-Week Highs

The Euro moved back above the 1.1500 level against the Dollar after weak US jobs data on Thursday and made further headway on Friday with 1-week highs close to 1.1560.

According to ING; “There is a chance that EUR/USD may have established an important low at 1.1470 this week. But for a rally to unfold, we will probably need to get more clarity on the slowing US jobs market. Let’s see whether intra-day support at 1.1500/1510 can now hold.”

UOB commented; “the EUR’s weakness from a week ago has stabilised, and we expect EUR to trade in a range of 1.1485/1.1610 for the time being.

Challenger reported that layoffs in October surged 175% from a year ago to 153,074, the highest October figure for 20 years. For the first 10 months of the year, layoffs increased 65% to near 1.1mn.

ING noted the weak data, but added; “with the US government shutdown ongoing, we are still in the dark about the true labour market picture.”

Jeffries economist Mohit Kumar noted the scarcity of data; “With the December Fed meeting more or less a coin toss which crucially depends on the labour market picture, the market is overreacting to any hints about the labour market.”

Markets are pricing in just over a 65% chance of a further Fed rate cut at the December meeting.

MUFG noted the impact of uncertainty; “The Fed has indicated that it would prefer to leave rates on hold in December if they are unable to gain more clarity on the health of the US economy and labour market by then.”

The US government shutdown has still not been resolved.

MUFG added; “The timing of when the record government shutdown comes to an end remains important for US dollar performance.”

The US currency will be vulnerable if there is convincing evidence of a weaker labour market.

The Euro could still face challenges surrounding the global economy with markets also digesting the outlook for US tariffs.

ING commented; “While we like the idea of a weaker dollar and a stronger EUR/USD, last night’s Chinese trade data is unwelcome news. It suggests China might not have as easily diversified its exports away from the US as first thought – or at least the ex-US demand is insufficient to offset the loss of the US market. That will only add to fears of increasing Chinese pressure in European markets.”

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TAGS: Euro Dollar Forecasts

Unicredit Tower A, Milan © Sergio Fabio Brivio, Flickr

Bank of England will cut rates faster than expected, warns UniCredit.

The market is underestimating how far and fast the Bank of England will cut interest rates, which will weigh materially on the pound to euro exchange rate, says a leading global investment bank.

“We see more and faster rate cuts than markets,” says Daniel Vernazza, Chief International Economist at UniCredit in London.

The market is currently anticipating two more reductions in Bank Rate during this cycle, taking it to 3.5%.

This expectation was reinforced by Thursday’s decision to leave interest rates unchanged at 4.0% but signal in clear terms that another cut was imminent. Most economists think the tone adopted by the Bank points to a cut at December’s meeting.

However, UniCredit expects the labour market to continue to weaken and consumption growth to remain soft, reinforced by the likely material tightening of fiscal policy in the upcoming Autumn Budget.

The government looks all but set to raise the basic rate of income tax for the first time since the 1970s, which economists say will squeeze the economy and pressure inflation.

“Inflation should move down to 2% next year. In this environment, we expect the MPC to cut rates in December, followed by a quarterly pace of rate cuts next year to 2.75%,” says Vernazza.

The Bank of England’s November Monetary Policy Report revealed forecasts showing it expects inflation to fall back to the 2.0% target much later, in late 2027.

The Bank’s latest forecasts also show it is modelling the economic outlook on the market’s assumption that Bank Rate will fall to a terminal rate at 3.5% next year.

Foreign exchange markets are responsive to interest rate expectations, meaning the pound would decline in the event that the market adjusts to UniCredit’s thinking on inflation and the more aggressive path of cuts that the Bank of England would respond with.

If the Milan-based lender is correct, a significant repricing in market interest rate expectations awaits, which will drag materially on the pound.

Given this, UniCredit holds a pound to euro forecast of 1.11, which is well below the consensus of predictions made by its peer investment banks.

Above: 1.11 is the bottom of a long-term range for GBP/EUR.

The Pound Sterling (GBP) extended its downtrend and reached seven-month lows near 1.3000 against the US Dollar (USD), before GBP/USD buyers quickly jumped in and recovered some ground.

Pound Sterling rebounded; not out of the woods yet

Safe-haven flows returned with a bang and acted as a strong headwind to the risk-sensitive Pound Sterling while boosting the US Dollar to its highest in five months against its six major currency rivals.

“Sell everything” theme gripped the market as traders witnessed a wave of exhaustion following the Artificial Intelligence (AI) driven record rally in global stocks. US tech stocks tumbled, drowning the major indices, with investors selling Gold to cover their losses in equity markets.

Investors grew concerned over inflated technology stock valuations, particularly in the artificial intelligence (AI) space, fuelling the long-due correction in global indices.

That being said, the USD also found fresh support from reduced expectations that the US Federal Reserve (Fed) will deliver another interest rate cut in December. The December Fed rate cut bets were slashed after strong US private sector employment and services activity data.

Data published by the ADP showed that US private payrolls increased by 42,000 jobs in October, exceeding expectations of a 25,000 gain, while the ISM Services PMI increased more than expected to 52.4 last month due to a solid jump in New Orders.

This broad USD strength smashed the GBP/USD pair to challenge the 1.3000 psychological level before it staged a decent comeback in the latter part of the week.

Cable’s turnaround was mainly driven by a sharp pullback in the USD across the board and US Treasury bond yields, following Thursday’s private labor data and resurfacing concerns over a protracted government shutdown.

The executive outplacement firm Challenger, Gray & Christmas said on Thursday that corporations announced a 183.1% monthly surge in layoffs, the worst October in over two decades, per Reuters.

The latest jobs data refuelled concerns about the weakening US labor market conditions, slightly boosting the odds of the Fed rate cut next month to 69% versus a drop to 62% seen after the release of the US ADP Employment Change data.

The recovery in GBP/USD was unfazed by the Bank of England’s (BoE) dovish hold decision. The members of the BoE Monetary Policy Committee (MPC) voted 5-4 to maintain the key Bank Rate at 4%, in a narrower than expected split.

The BOE underscored that future rate cuts will depend on the evolution of the outlook for inflation. “If progress on disinflation continues, Bank Rate is likely to continue on a gradual downward path,” the Monetary Policy Statement (MPS) said.

Heading into the weekend, the USD came under renewed selling pressure and helped GBP/USD stretch higher. The monthly report published by the University of Michigan (UoM) showed that the Consumer Sentiment Index dropped to 50.3 in November from 53.6 in October.

Week ahead: High-impact UK data to hog the limelight

Amid a holiday-shortened week, the data drought from the United States (US) will likely continue as no end in sight to the government shutdown.

The longest shutdown in American history will put the focus back on some private-sector statistics and speeches from Fed officials. In case the government funding is restored, the delayed US Nonfarm Payrolls and Jobless Claims will be eagerly awaited.

The US Consumer Price Index (CPI), Producer Price Index (PPI) and Retail Sales reports for October will also be in focus. 

From the United Kingdom’s (UK) economic calendar, the employment data on Tuesday will offer some incentives to Pound Sterling traders.

On Wednesday, BoE Chief Economist Huw Pill is due to speak in a panel discussion titled “An assessment of the BoE’s reaction to Covid-19” at the Institute of International Monetary Research Conference hosted by the University of Buckingham.

Thursday will feature the monthly and preliminary reading of the British third-quarter Gross Domestic Product (GDP) data alongside the industrial figures.

GBP/USD: Technical outlook

As observed on the daily chart, GBP/USD is struggling at the previous strong support-turned-resistance at 1.3142 on the road to recovery.

The 14-day Relative Strength Index (RSI) has turned lower while below the midline, currently near 36, suggesting that more downside remains on the cards.

Adding credence to the bearish potential, the 21-day Simple Moving Average (SMA) is looking to close the week below the 200-day SMA, which will confirm a Bear Cross if that happens.

These technical indicators point to more pain for the GBP/USD pair heading into a new week.

If the abovementioned resistance is scaled decisively, powerful resistance will then align around the 1.3265 region, where the Aug 4 low, the 21-day and 200-day SMA close in.

A sustained move above that zone will unleash additional recovery toward the 50-day SMA barrier at 1.3393.

Conversely, if the downside regains momentum, a test of the multi-month troughs at 1.3010 will be inevitable.

Selling pressure will intensify below the latter, opening the door toward the April 11 low of 1.2967.

The last line of defense for Pound Sterling buyers is seen at the 1.2850 psychological level.

Platinum price didn’t change anything due to its fluctuation between the levels of the current sideways track, that are represented by $1605.00, and $1525.00, which represents a key support for reducing the chances of suffering extra losses.

Note that stochastic attempt to provide positive momentum might push the price to form bullish trading, to attempt to renew the pressure on the previously mentioned barrier, to find an exit to record extra gains in the upcoming period, while breaking the support and holding below it will force it to suffer several losses that begin at $1485.00. 

The expected trading range for today is between 985.00 and 1040.00

Trend forecast: Bullish

Platinum price didn’t change anything due to its fluctuation between the levels of the current sideways track, that are represented by $1605.00, and $1525.00, which represents a key support for reducing the chances of suffering extra losses.

Note that stochastic attempt to provide positive momentum might push the price to form bullish trading, to attempt to renew the pressure on the previously mentioned barrier, to find an exit to record extra gains in the upcoming period, while breaking the support and holding below it will force it to suffer several losses that begin at $1485.00. 

The expected trading range for today is between 985.00 and 1040.00

Trend forecast: Bullish