– Written by


Frank Davies

STORY LINK Pound-to-Dollar Forecast: GBP/USD Bounces as US Treasury Yields Retreat

The Pound to Dollar exchange rate (GBP/USD) rebounded towards 1.3250 after falling to 16-week lows near 1.3160 following hotter-than-expected US inflation data.

Stronger UK GDP and a retreat in US Treasury yields helped Sterling recover, although persistent underlying US price pressures have reinforced expectations of further Federal Reserve tightening.

GBP/USD Forecasts: Rebound from 16-Week Lows

The Pound to Dollar (GBP/USD) exchange rate rebounded strongly on Thursday after sliding to 16-week lows following hotter-than-expected US inflation data.

GBP/USD had fallen close to 1.3160 after Wednesday’s CPI release, but recovered towards 1.3250 as US Treasury yields retreated and the Dollar surrendered part of its post-inflation gains.

The stronger Pound was also supported by unexpectedly resilient UK growth data.

According to UoB, the recent recovery remains fragile; “To sustain the momentum, GBP must hold above 1.3230.”

The 2026 low around 1.3140 remains an important downside level, with a sustained break potentially increasing the risk of a move towards 1.3000.

US consumer prices increased sharply in September, reinforcing expectations that the Federal Reserve will tighten policy again before the end of the year.

Headline CPI increased 0.6% on the month, while the annual inflation rate accelerated to 3.7% from 3.4%, above consensus forecasts of 3.6%.

The increase was driven partly by a 7.1% monthly jump in gasoline prices.

Core prices rose 0.3% on the month, compared with expectations of 0.2%, while the annual core rate increased to 2.6% from 2.4%.

The figures triggered an immediate surge in US Treasury yields and broad Dollar gains.

Markets raised the probability of an October Federal Reserve hike sharply following the release, although pricing subsequently moderated as bond yields retreated.

A December increase remains much more firmly priced.

Schroders senior economist George Brown commented; “While energy prices might be grabbing the headlines, today’s report suggests the inflation problem runs much deeper.”

He added; “A stronger-than-expected core inflation reading adds to mounting evidence that domestic price pressures are becoming more entrenched, rather than easing.”

ING currently expects the Federal Reserve to wait until December before increasing rates again, although it sees risks skewed towards additional tightening if inflation remains elevated.

MUFG is also cautious over extrapolating the latest rise in prices into a prolonged tightening cycle.

The bank commented; “We remain sceptical that inflation pressures will continue to build and while we expect the Fed to hike again in December, we do not expect the Fed to deliver the two further rate hikes currently priced by the markets.”

Pound Sterling received an additional boost on Thursday after the latest UK growth figures exceeded expectations.

UK GDP increased by 0.1% in August compared with forecasts for a 0.1% contraction.

Annual growth accelerated to 2.1%, while manufacturing output increased sharply during the month.

The data provided some reassurance that the UK economy is proving more resilient than feared despite elevated energy prices and borrowing costs.

The Pound also benefited from the retreat in US Treasury yields as investors moved into government bonds amid renewed weakness in global technology stocks.

The Dollar consequently gave back part of Wednesday’s CPI-driven advance.

For GBP/USD, the 1.3230-1.3250 region is now the immediate technical area to watch.

A sustained recovery above 1.3275 would improve the short-term outlook and could bring 1.3300-1.3350 back into focus.

Conversely, renewed Dollar buying would expose 1.3200 followed by the 2026 low around 1.3140.

The wider direction will remain highly sensitive to US rate expectations, with upcoming retail-sales and producer-price data likely to determine whether Wednesday’s inflation shock produces another sustained rise in Treasury yields.

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EUR/USD is trading near 1.1211 on the 4-hour chart after bouncing up from 1.1112. Price has since moved above 1.1153, but it remains below the descending trendline and the shorter- term moving average. The broader technical structure remains bearish.

The first area of resistance is at 1.1237. Should price break through that level, the next area of resistance is at 1.1278 and the final area of resistance is at 1.1316. The first area of support is at 1.1153. The second area of support is at 1.1112. The final area of support is at 1.1071. Support may be tested if the rebound fails.

RSI is in the bullish territory and has improved from the previous oversold territory. I am neutral to bearish with a slightly bearish bias while EUR/USD remains below 1.1237 and the descending trendline.

Should EUR/USD break above 1.1237, that would improve the chances of a further rebound. Should it break below 1.1153, that would put 1.1112 back in focus.

Despite the pair’s recent weak trading, its repeated stability below the additional barrier at 177.80 confirms that it remains influenced by the previously suggested bearish trajectory. We will continue to wait for the price to gather negative momentum before resuming its decline, initially targeting 175.75, followed by the main target near 174.95.

However, a surge above 177.80 followed by a positive close would signal the beginning of bullish corrective waves, potentially allowing the pair to recover some losses by advancing first toward 178.60 and then toward the resistance barrier near 179.45.

The expected trading range for today is between 175.75 and 177.70.

Trend forecast: Bearish

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U.S. Dollar Index rallied as traders focused on inflation data. Inflation Rate increased from 3.4% in August to 3.7% in September, compared to analyst forecast of 3.6%. Core Inflation Rate grew from 2.4% to 2.6%, compared to analyst consensus of 2.5%. The reports indicated that high energy prices have started to push prices of other goods and services higher.

FedWatch Tool indicates that the probability of a rate hike at the next Fed meeting has increased to 37.1%. Interestingly, traders believe that Fed will keep rates unchanged in October despite rising inflation.

EURJPY traded sideways yesterday, holding near 177.30 amid conflicting signals from the main technical indicators, particularly as stochastic fluctuated above the 20 level, temporarily hindering the pair’s chances of resuming its bearish movement.

We note that the formation of additional resistance at 177.80 supports the chances of the pair initiating bearish waves soon, targeting 175.75, followed by the next main target near 174.95. However, a break above this resistance barrier would give the pair an opportunity to recover some of its losses through several bullish corrective waves, potentially targeting 178.60 and 179.45.

The expected trading range for today is between 175.75 and 177.70.

Trend forecast: Bearish

Created on October 14, 2026

The USD/JPY pair continues to be one that is following the carry trade, as far as I can see at the moment.

USD/JPY

The U.S. dollar has fallen a bit during the trading session on Tuesday against the Japanese yen, as we have tested the 200-day EMA. Since then, we’ve seen a bit of a bounce from the 200-day EMA, and it looks a lot like a market that is still trying to build pressure to break above the crucial ¥159 level.

The interest rate differential continues to favor the United States

The interest rate differential continues to favor the United States, and probably will for the rest of my life at this rate. What’s interesting is that sources are now saying that the Bank of Japan is very unlikely to raise rates again in October, which makes sense considering that the amount of debt in Japan is egregious.

With that being the case, the interest rate differential continues to see a lot of U.S. dollar-positive behavior. Quite frankly, the Japanese intervene from time to time, but all it does is slow down the move.

If we can break above the ¥159 level, I’ll be looking for ¥160. A breakdown from here, I think, has support at the 200-day EMA and the ¥156.50 level. I’m not looking to short this pair. I like getting paid at the end of every day with the carry, and have been long this market going back to July in one extreme or the other. I got out a couple of months ago for a day or two and then got back in.

That’s kind of where I’m at. I still feel the same way here. I’m still comfortable with the interest rate differential over the longer term, and U.S. rates remain elevated, even though they have slipped a little bit recently.

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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

In the near-term, I see the 1.3284 level as the next resistance area, with a break above it targeting the 1.3323 and 1.3368 levels respectively. A move to the downside could see price test the 1.3222 support area again, with the 1.3180, 1.3147, and 1.3113 levels coming into play should the breakout fail to materialize.

RSI has also moved toward the overbought region, confirming the bullish bias, however, the strength of the move suggests a correction may be due. I am bullish while the pair trades above the 1.3222 support and the descending trendline. A clean break above 1.3284 strengthens the case for a move to 1.3323, and a break below 1.3222 negates the breakout.

EUR/USD Technical Analysis: Euro Tests Descending Trendline as 1.1233 Becomes the Breakout Trigger

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

USD/CAD is losing ground despite the pullback in precious metals markets. Gold continues its attempts to settle below the $4150 level, while silver pulled back towards the $59.00 level. Other commodity-related currencies are also moving higher in today’s trading session.

In case USD/CAD settles below the 1.4200 level, it will head towards the support at 1.4135 – 1.4150. On the upside, USD/CAD needs to settle back above the resistance at 1.4235 – 1.4250 to have a chance to gain upside momentum in the near term. In this case, USD/CAD will move towards the 1.4300 level.

USD/JPY Stays Range-Bound