GBP/USD Technical Analysis

The British pound looks sick, quite frankly. If we break down below the 1.3150 level, then I think the bottom falls out. We go looking to the 1.27 level. We are hanging around the 200-day EMA, and I obviously believe that the FOMC interest rate decision, or perhaps more importantly, the press conference after that, will drive where the U.S. dollar goes next, which obviously will drive where this pair goes.

We do not have an interest rate decision coming out of the United Kingdom this week, unlike the European Central Bank. So, I think this is going to be all about the U.S. dollar. Short-term rallies, I think, open up the possibility of short opportunities at the first signs of exhaustion.

EUR/GBP Technical Analysis

Looking at the euro against the British pound, we continue to rally quite nicely as we are now threatening the 0.88 level. Short-term pullbacks should end up being buying opportunities, but keep in mind that we have the European Central Bank with its interest rate decision on Thursday that would cause some volatility. It looks like the 0.8750 level will be a bit of a floor in this market, so a pullback from here is going to turn around and bounce quite nicely.

I’m looking for dips as value. I don’t have any interest in shorting this market. Breaking above the 0.8750 level opened up the possibility of a move to the 0.89 level based on the measured move of the previous consolidation area.

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Created on October 29, 2025

• The British pound initially rallied on Tuesday but reversed sharply, falling below its 200-day EMA.
• With the Federal Reserve poised to move before the Bank of England, the GBP/USD pair faces growing downside risk toward 1.32 and potentially 1.3150 support.

The pound initially rallied during the trading session on Tuesday, but then fell rather significantly to break below the 200-day EMA. At this point, I have to ask whether the British pound is going to start to fall apart. This currency seems to be in flux, as the British pound has, for the last year and a half or so, been a bit more stable against the US dollar than most of its counterparts. However, over the last couple of weeks, we’ve seen an acceleration to the downside.

The Bank of England does not have a meeting this week, unlike the Federal Reserve, so the Federal Reserve might be the next mover of this pair. If we continue to drop from here, the 1.32 level is an area I’d be very sensitive to because it represents significant support. Breaking down below the 1.3150 level could kick off the next leg lower and would usher in a new push to the upside for the US dollar—probably not only against the British pound but multiple other currencies as well.

The US Dollar Has Overperformed Others

The US dollar has outperformed most currencies, and I look at a weakening US dollar during any particular trading session as a potential buying opportunity to get my hands on more greenbacks. The British pound seems to have a bit of a brick wall near the 50-day EMA, which is currently just above the 1.34 level. I think the upside is somewhat limited.

As the US dollar goes, so go the rest of the currencies, and that’s exactly what we’re seeing here. The US dollar is showing signs of life, and it is starting to weigh upon the British pound. Whether we can continue to the downside remains to be seen, but clearly, at this point in time, it’s very difficult for the pound to gain traction against the US dollar.

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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.

Created on October 29, 2025

• The British pound fell sharply against the yen in early Tuesday trading amid volatility following Bank of Japan comments.
• Despite short-term weakness, the analyst sees buying opportunities near ¥200 and the 50-day EMA, targeting a return toward ¥205.

The British pound has fallen significantly against the Japanese yen during early trading on Tuesday, as the market continues to be very volatile. The Bank of Japan made a statement overnight that it believes forex moves should represent fundamentals. To me, that’s something they’ve said multiple times in the past, and it always leads to the same thing: the Japanese yen strengthening for a little bit, only to see buyers coming back into the market and shorting it again.

With that in mind, I’m looking at the area right around the 50-day EMA as an area that could offer support, right along with the ¥200 level. Because of this, I’m looking for an opportunity to buy this pair on some type of bounce. As things stand right now, it looks like we have plenty of pressure to the downside, so I would have to be very patient here. All things being equal, this is a scenario where I think you look for value and take advantage of it—not only are we in a significant uptrend, but we also have the interest rate differential between the British pound and the Japanese yen.

A Potential Target

All things being equal, this is a market that I think tries to get back to the ¥205 level, an area that has previously been very difficult to break above. If we can break above that level, then we could go much higher. Ultimately, I do think that’s what happens, and I favor the British pound over the Japanese yen. That’s probably true with most currencies, but the interest rate differential between the British pound and the Japanese yen is much wider than what’s found in other pairs, such as the Canadian dollar or even the Swiss franc against the yen.

Not all pairs are going to move with the same type of momentum, although they do tend to move in the same general direction. All things being equal, this is a market where I’m looking for a buying opportunity that I expect to take advantage of in the next day or two.

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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.

The GBPJPY pair activated the previously suggested bearish corrective track, putting it under strong negative pressure to achieve the previously suggested stations by reaching 201.15, then retesting the extra support at 201.75.

Forming extra barrier at 202.55 level and the continuation of providing negative momentum by stochastic will increase the efficiency of the bearish corrective track, to expect targeting 200.45 level, and surpassing it might extend the losses towards 199.20 directly.

The expected trading range for today is between 200.45 and 202.55

Trend forecast: Bearish

– Written by


David Woodsmith

STORY LINK Pound to Dollar Price Forecast: GBP/USD Drops on UK Budget Risks

The Pound-to-Dollar exchange rate (GBP/USD) slipped sharply on Tuesday as investors turned cautious ahead of the UK government’s upcoming autumn budget.

At the time of writing, GBP/USD was trading at 1.32815, down around 0.44% from Tuesday’s opening levels.

The Pound (GBP) came under renewed pressure after the Office for Budget Responsibility (OBR) warned that the UK faces a £20bn fiscal shortfall, largely due to weak productivity and slowing growth.

The findings intensified speculation that Chancellor Rachel Reeves may be forced to introduce tax increases in next month’s budget to shore up the nation’s finances.

The prospect of tighter fiscal measures dampened market sentiment, with investors wary that higher taxes could weigh on household spending and slow the UK’s already fragile recovery.

As a result, Sterling struggled to find support through the European session, with the Pound weakening against a firming US Dollar.

The Greenback (USD) held steady ahead of the Federal Reserve’s interest rate decision on Wednesday, buoyed by safe-haven demand as global markets adopted a more cautious tone.

Investors widely expect the Fed to announce a 25-basis-point rate cut, but uncertainty over future policy guidance kept USD trading volatile.

GBP/USD Forecast: Fed Decision to Steer Mid-Week Direction

Looking ahead, attention will turn squarely to the Federal Reserve’s rate announcement, which is likely to set the tone for mid-week market movement.

If Chair Jerome Powell signals that further rate cuts are on the table before year-end, the Dollar may weaken, potentially giving GBP/USD scope to rebound.

However, a more measured tone — or hints that this could mark the final cut of the cycle — could strengthen the Greenback, pushing the pair lower still.

With the UK data calendar empty until the end of the week, the Pound will remain heavily influenced by global sentiment and speculation over both Fed policy and UK fiscal plans in the run-up to the November budget.

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TAGS: Pound Dollar Forecasts

Fed Interest Rate Decision and Powell’s Press Conference

While economists speculate about the timing of a BoJ rate hike, the Fed will take center stage later on Wednesday, October 29.

Economists expect the Fed to cut interest rates by 25 basis points. Unless there is a surprise 50-basis-point cut, Fed Chair Powell will set the tone for markets. Support for a December rate cut to bolster the labor market and acknowledgement that inflation has peaked could send USD/JPY toward 150 and the 50-day EMA. If breached, the 200-day EMA would be the next key technical support level.

The US government shutdown could extend to day 29, leaving the Fed flying blind on crucial labor market data. Fed Chair Powell had already taken a more dovish stance before the shutdown as labor market data signaled weaker conditions.

Beyond Fed Chair Powell’s views on interest rates, there is also the potential winding down of Quantitative Tightening (QT).

On October 14, 2025, Fed Chair Powell gave his strongest signal on QT, stating:

“Our long-stated plan is to stop balance sheet runoff when reserves are somewhat above the level we judge consistent with ample reserve conditions.”

He also noted that there were early signs of tightening liquidity conditions.

Notably, winding down QT would also narrow the US-Japan rate differential, favoring the yen, potentially being compounded by a hawkish BoJ policy stance. This scenario could trigger a market event similar to the yen carry trade unwind on July 31, 2024.

The Australian dollar to US dollar (AUD/USD) exchange rate is trading near 0.6578, up 0.3% on the day as the currency rebounds from recent lows.

Nomura has turned more optimistic on the Aussie, targeting a move to 0.6875 by the end of December as the dollar’s strength fades and domestic inflation data improve.

“We think AUD looks cheap relative to a range of cross-market indicators,” the bank said, adding that the recent pull-back “creates an opportunity to express a more bullish view on the currency.”

The easing of US–China trade tensions is a key factor. “Calmer trade relations leave a window of opportunity for volatility to remain low or drift lower, providing a healthier backdrop for AUD to rebound,” Nomura wrote.

Commodity prices are another support. “Elevated copper prices should help through the terms-of-trade channel,” it said, though the bank acknowledged that gold’s recent pull-back could pose a short-term risk.

Nomura also expects Australia’s Q3 CPI to surprise on the upside, with stronger non-tradables and services inflation reducing the likelihood of near-term RBA rate cuts.

“Our forecast CPI would mark a material miss versus the RBA’s earlier expectations,” the bank noted, “which could make the rates channel more supportive for AUD.”

Nomura’s bullish view is further reinforced by seasonal year-end inflows and a potentially softer US dollar, with the Fed likely to adopt a more dovish stance following weaker inflation data.

Current AUD/USD rate: 0.6578.

Nomura forecast: 0.6875 by December 2025.

The Pound to US Dollar (GBP/USD) exchange rate slipped on Tuesday as renewed UK fiscal concerns weighed on Sterling ahead of the government’s autumn budget.

DAILY RECAP:

The Pound (GBP) came under pressure on Tuesday after the Office for Budget Responsibility (OBR) warned that the UK faces a £20bn fiscal gap due to weak productivity growth.

The assessment fuelled speculation that Chancellor Rachel Reeves may be forced to announce tax hikes in next month’s Autumn Budget to stabilise public finances.

The prospect of tighter fiscal policy dampened market confidence, keeping Sterling subdued throughout Tuesday’s European session.

Meanwhile, the US Dollar (USD) traded mixed as investors positioned cautiously ahead of Wednesday’s Federal Reserve interest rate decision.

The Greenback firmed modestly against risk-sensitive rivals amid a mildly risk-off backdrop, though gains were capped as traders awaited confirmation of the Fed’s expected 25bp rate cut.

As a result, GBP/USD drifted lower through the session, with broader sentiment providing little relief for either currency.

Near-Term GBP/USD Forecast: Fed Decision to Steer Dollar Moves

Looking ahead, the Federal Reserve’s policy announcement will dominate mid-week trade.

Markets have already priced in a quarter-point rate cut, which could see the Dollar weaken modestly if confirmed.

However, a larger cut — or a dovish signal on future easing — could spark a sharper Greenback selloff, potentially allowing the Pound to recover lost ground.

For Sterling, a quiet UK calendar leaves the currency vulnerable to external sentiment shifts.

Should risk appetite improve and markets turn optimistic, GBP/USD could rebound as investors rotate out of the Dollar and back into higher-yielding assets.