February 15, 2025 – Written by Frank Davies

STORY LINK GBP/USD Forecast: Pound Sterling Posts 2025 Best Rate on Dollar Retreat

Two elements have undermined the US Dollar (USD) over the last 24 hours, but the Pound Sterling (GBP) has made headway.

As markets closed, the Pound to Dollar exchange rate (GBP/USD) was seen trading at 1.25863, while the Dollar to Pound exchange rate (USD/GBP) was at 0.79452.

There has been some relief that the Administration has not moved immediately to impose reciprocal tariffs while lower yields have also undermined the US currency.

Although there are significant doubts surrounding the UK economy, the Pound has been one of the principal winners in global markets.

GBP/CHF, for example, hit 6-month highs just above 1.1400.

The Pound to Dollar (GBP/USD) exchange rate has strengthened to 2025 highs just below 1.2600.

UoB commented; “There has been a sharp increase in momentum, and we expect GBP to strengthen further.” It sees initial resistance at 1.2600 and 1.2650.

The Pound to Euro (GBP/EUR) exchange rate has edged above the 1.2000 level.

President Trump announced the potential for reciprocal tariffs on international trade partners overnight.

There will be no immediate move to impose tariffs with the Commerce Department engaged in complex calculations and an outcome is expected by April, although there could be a longer delay.

Rabobank commented; “Although the tariffs could cause upheaval in global trade, there is still plenty of hopium that world leaders will try to strike a deal with the US president.”

According to ING, “The outcome is likely to be perhaps some eye-wateringly large tariffs against some of the key countries with which the US runs a goods deficit. The EU will certainly be in the cross-hairs since it looks like Trump is using the threat of tariffs as leverage against the EU’s digital service tax.”

ING added, “We have already been using the assumption of peak trade pressure in the second quarter of this year. The above looks consistent with that and it’s why we think the dollar will move a little stronger into the second quarter. This means the current dollar dip should be a correction rather than a meaningful new trend.”

MUFG, however, is concerned that the Administration will be looking at non-tariff factors in deciding action.

In this context, the bank is also not convinced that the dollar retreat will be sustained; “Taking everything into consideration, we are not convinced that the initial US dollar sell-off on the back of investor relief that the “reciprocal tariffs” will not be implemented until at least April will be sustained for long.”

The headline US producer prices data was slightly stronger than expected, maintaining inflation concerns. However, The components that feed through into the PCE prices index were weaker than expected.

Given that the Federal Reserve targets the PCE prices index, the data offered some reassurance.

MUFG commented, “While it does not provide justification for the Fed to cut rates soon, it has helped to bring forward expectations for the timing of the next Fed rate cut a little.”

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Tesla’s stock price (TSLA) rose in the intraday levels after finishing the harmonic short term formation that is the AB/CD pattern, which is a positive pattern, combined with positive signals from the RSI after reaching oversold levels, amid the dominance of the main upward trend in the medium term, while still suffering due to trading below the 50-day SMA, hindering upcoming gains. 

Therefore we expect more gains for the stock, targeting the important resistance of $377.30, provided the support of $326.60 holds on.

Trend forecast for today: Bullish 

• The GBP/USD price analysis shows a brighter outlook for the UK economy.

• The UK economy expanded by 0.1% in the fourth quarter of last year.

• Market participants have lowered expectations for Fed rate cuts.

The GBP/USD price analysis shows a brighter outlook for the UK economy after GDP data revealed an unexpected expansion in Q4 last year. Meanwhile, the dollar remained fragile as the impact of Trump’s tariff threats faded.

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Data on Thursday revealed that the UK economy expanded by 0.1% in the fourth quarter of last year. This figure came above estimates of a 0.1% contraction. The British economy has slowed down significantly, putting pressure on the Bank of England to lower borrowing costs. The upbeat report eased some of that pressure, boosting the pound. Market participants are now pricing 54-bps of rate cuts this year by the Bank of England. If the economy shows more bright spots, rate-cut bets will drop.

On the other hand, market participants have lowered expectations for Fed rate cuts due to upbeat inflation data. Both consumer and wholesale inflation figures came in above estimates, suggesting higher rates for longer in the US. Initially, the more hawkish outlook boosted the dollar.

However, the focus shifted to Trump tariffs, leading to a drop in the US currency. Reports revealed that there will be delays in implementing Trump’s reciprocal tariff. As a result, market participants believe this will give countries time to negotiate better trading deals.  

GBP/USD key events today

• US core retail Sales m/m
• US retail sales m/m

GBP/USD technical price analysis: Bulls reach a new high above 1.2550

On the technical side, the GBP/USD price has broken above the 1.2550 resistance level to make a new high in the bullish trend. Moreover, the price trades far above the 30-SMA, and the RSI is nearing the overbought level, indicating solid bullish momentum. If the rally continues, the price will reach the 1.2651 level. 

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However, the price has maintained a shallow uptrend on a larger scale. As a result, when the price forms a new high, it is near the previous high. This means the price returns to the bullish support trendline soon after making a new high. 

If this is the case, the price will soon reverse to break below the 30-SMA and retest the support trendline. Nevertheless, it will keep making higher highs if it stays above the trendline.

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• EUR/USD trades at its highest level in over two weeks above 1.0450.
• The US economic calendar will feature Retail Sales data for January.
• US stock index futures trade marginally higher on the day.

EUR/USD gathered bullish momentum in the late American session on Thursday and gained nearly 0.8% on the day. After touching its highest level since January 28 above 1.0470 in the Asian session on Friday, the pair seems to have entered a consolidation phase near 1.0460 in the European morning.

EUR/USD edged lower in the early American session on Thursday after US President Donald Trump hinted in a social media post that they could announce reciprocal tariffs.

Later in the day, Trump refrained from imposing new tariffs, instead he signed a memo ordering his economics team to devise a plan for reciprocal tariffs on every country that charges duties on US imports. Markets breathed a sigh of relief with this development, allowing risk flows to return and causing the USD to weaken. In turn, EUR/USD gained traction and closed the day decisively higher.

Meanwhile, Trump’s trade adviser, Peter Navarro, called German auto tariffs “grossly unfair” and a White House official said that Trump will no longer tolerate the EU’s value-added tax. 

In the second half of the day, January Retail Sales data will be featured in the US economic calendar. Markets expect a decrease of 0.1% on a monthly basis. A positive surprise could help the USD stay resilient against its rivals with the immediate reaction. Nevertheless, EUR/USD’s losses are likely to remain limited in case risk flows continue to dominate the action in the financial markets. At the time of press, US stock index futures were trading marginally higher on the day.

EUR/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart stays above 70, suggesting that EUR/USD correct lower before extending its uptrend.

On the upside, 1.0500-1.0510 (round level, Fibonacci 78.6% retracement of the latest downtrend) could be seen as the resistance area before 1.0550 (static level) and 1.0600 (static level, beginning point of the downtrend). Looking south, first support could be spotted at 1.0440 (100-period Simple Moving Average (SMA), Fibonacci 61.8% retracement) ahead of 1.0400 (Fibonacci 50% retracement) and 1.0350-1.0360 (Fibonacci 38.2% retracement, 200-period SMA).

The GBPJPY pair ended the recent bullish rally by recording 191.17 level, approaching 193.30 barrier to force it to postpone the bullish attack and provide mixed trades by fluctuating near 191.80.

Also, the contradiction between the major indicators by the MA55 consolidation above the mentioned barrier confirm the price surrender to the domination of the sideways bias, to expect moving between the current barrier and 190.80 additional support.

The expected trading range for today is between 191.00 and 193.30

Trend forecast: Sideways

The EURJPY pair touched 161.18 level followed by declining below 160.25 barrier again due to the continuous contradiction between the major indicators to force it to postpone the bullish rally for now.

The price might continue to provide mixed trades until confirming breaching the mentioned barrier to reinforce the chances of achieving new gains that might extend towards 161.65 and 162.40 levels first, while declining below 159.00 will force it to suffer big losses by crawling towards 157.90 and 157.30 levels.

The expected trading range for today is between 159.20 and 160.25

Trend forecast: Sideways

Tesla’s stock price (TSLA) rose in the intraday levels after finishing the harmonic short term formation that is the AB/CD pattern, which is a positive pattern, combined with positive signals from the RSI after reaching oversold levels, amid the dominance of the main upward trend in the medium term, while still suffering due to trading below the 50-day SMA, hindering upcoming gains. 

Therefore we expect more gains for the stock, targeting the important resistance of $377.30, provided the support of $326.60 holds on.

Trend forecast for today: Bullish 

Tesla’s stock price (TSLA) rose in the intraday levels after finishing the harmonic short term formation that is the AB/CD pattern, which is a positive pattern, combined with positive signals from the RSI after reaching oversold levels, amid the dominance of the main upward trend in the medium term, while still suffering due to trading below the 50-day SMA, hindering upcoming gains. 

Therefore we expect more gains for the stock, targeting the important resistance of $377.30, provided the support of $326.60 holds on.

Trend forecast for today: Bullish 

Created on February 14, 2025

• The Euro has rallied during the trading session on Thursday as we are now testing the crucial 50 Day EMA.
• The 50-day EMA is a significant technical indicator that many traders closely monitor.
• Ultimately, this is a market that I think continues to see a lot of choppiness, but I believe that the Euro will continue to be rather weak from the longer-term standpoint.

Recent Consolidation

Recently trading in this market has been between the 1.05 level at the top and the 1.02 level at the bottom. At this point, we are getting fairly close to the top, and it’s probably worth noting also that the 1.05 level has a lot of noise that extends all the way to the 1.06 level. Because of this, I think you’ve got a situation where a lot of traders are going to be struggling to break out above there, but if we did see the Euro break that level, then you have to have serious discussions as to whether or not the trend has changed.

As things stand right now, I don’t see the EUR/USD pair breaking above there, unless something drastically changes in the United States, because the European Union is starting to see signs of life in Germany and France, but they still have a long way to go as far as monetary policy is concerned. In fact, this is part of the problem with the European Union, you have countries like Spain which will be completely different than countries like Greece or Finland. I would not want the job of setting monetary policy in this scenario.

As things stand right now, I’m more than willing to start fading signs of exhaustion after short-term rallies, and I think ultimately this is a market that will continue to look for a long wick’s to the upside to start shorting again. This is what I’ve been doing for a couple of months, and until something fundamentally changes, or we break above the 1.06 level, there’s no reason to get long of the Euro.

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