Jump to content

British Pound Outlook: GBP/USD, EUR/GBP, GBP/JPY Technical Forecast

Recommended Posts


  • GBP/USD bulls aim to break above the key psychological level of 1.36 despite a hawkish Fed
  • EUR/GBP falls to critical support at the lower bound of the descending triangle formation
  • GBP/JPY eager to break above October highs in an effort to claim 160

The British Pound has held onto recent gains as the rapid spread of the Omicron variant continues to hinder the pace at which the global economy can recover from the Coronavirus pandemic. After the BoE (Bank of England) made a decision to raise rates in December, the Sterling ended the year in positive territory and remains resilient against its major counterparts.

Although fundamental factors continue to drive risk sentiment, a high vaccination rate in the United Kingdom combined with higher rates has supported GBP/USD despite a hawkish Federal Reserve (Fed).

Find out more about the impact of interest rates on the foreign exchange market

Meanwhile, for EUR/GBP and GBP/JPY, the carry trade (difference between the rate differentials) has the probability of supporting Sterling prices as policymakers continue to fight against the effects of rising inflation.



After rebounding off of the 38.2% Fibonacci retracement level of the 2018 – 2020 move at 1.324, GBP/USD bulls managed to drive prices higher before facing a wall of resistance at the upper bound of the descending channel which continues to provide additional zones of support and resistance.

As bulls strive to clear the key psychological level of 1.36, price action currently remains below the 50-week moving average (SMA) and within the range of 1.32 and 1.36 respectively.

GBP/USD Weekly Chart

British Pound Outlook: GBP/USD, EUR/GBP, GBP/JPY Technical Forecast

Chart prepared by Tammy Da Costa using TradingView

However after bears failed to break below Fibonacci support, prices have since risen above the 50-day moving average (MA) on the daily time-frame while the CCI threatens oversold territory. If bulls are able to drive prices higher, a retest of 1.38 may be probable. On the contrary, failure to break above channel resistance may provide bears the opportunity to push prices back towards the 1.32 handle.

GBP/USD Daily Chart

British Pound Outlook: GBP/USD, EUR/GBP, GBP/JPY Technical Forecast

Chart prepared by Tammy Da Costa using TradingView


After five consecutive weeks of losses,the fundamental backdrop has allowed EUR/GBP to fall to a critical level of support, formed by the lower bound of a descending triangle. As bears now aim to retest the 2020 low at 0.828, bulls would need to drive prices above trendline resistance at the key psychological level of 0.85 for a chance at reviving the upward move.

EUR/GBP Weekly Chart

British Pound Outlook: GBP/USD, EUR/GBP, GBP/JPY Technical Forecast

Chart prepared by Tammy Da Costa using TradingView

As both the European Central Bank (ECB) and Bank of Japan (BoJ) maintain a dovish stance, EUR/GBP has the potential to continue to decline while GBP/JPY may continue to benefit from the carry trade.

GBP/JPY Weekly Chart

British Pound Outlook: GBP/USD, EUR/GBP, GBP/JPY Technical Forecast

Chart prepared by Tammy Da Costa using TradingView

Written by Tammy Da Costa, Analyst for DailyFX.com. 9th Jan 2022

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • Posts

    • Sainsburys full year earnings and Unilever’s first quarter trading update both say the same thing, UK consumers are in for higher prices. The war in Ukraine, supply chain issues and the effects of ongoing Covid all to blame.      
    • US Dollar (DXY) Daily Price and Analysis US Q1 GDP may stall the greenback’s advance. A 20-year high nears for the US dollar. The multi-month US dollar rally continues with the greenback printing a fresh high today ahead of the first look at US Q1 GDP at 12.30 GMT. The US dollar basket (DXY) has been boosted by renewed weakness in the Euro and the Japanese Yen, as investors move from lower-yielding to higher-yielding currencies, while safe-haven flows continue to benefit the greenback. The US growth release later in the session is expected to show a sharp slowdown from the robust Q4 figure of 6.9%. The markets are currently pricing in growth of just 1% for the first three months of this year, with the slowdown mainly due to a reduction in inventory accrual over the quarter. This release is unlikely to move the greenback, unless there is a large miss or beat, as the Fed believe that 2022 US growth will be robust enough to let them tighten monetary policy sharply without damaging the economy. The latest US Core PCE data – the Fed’s preferred inflation reading – is released on Friday and this may have more effect on the US dollar than today’s GDP data. For all market moving economic data and events, see the DailyFX Calendar. The ongoing US dollar rally has been aided by weakness across a range of G7 currencies including the Euro, the Japanese Yen, and the British Pound. The Euro continues to battle with lowly growth expectations, exacerbated by energy concerns, the British Pound is mired by weak economic data, while the Japanese Yen is in freefall as the BoJ continues with its ultra-loose monetary policy.   The US dollar continues to press higher and looks set to break above 103.96, the March 2020 high. Above here the US dollar would be back at levels last seen nearly two decades ago. The March resistance will likely hold in the short-term, especially with month-end portfolio rebalancing at the end of the week, but US dollar strength is set to continue in the months ahead. USDOLLAR (DXY) WEEKLY PRICE CHART – APRIL 28, 2022 {{THE_FUNDAMENTALS_OF_BREAKOUT_TRADING}} What is your view on the US Dollar – bullish or bearish?   Apr 28, 2022 | DailyFX Nick Cawley, Strategist
    • While Tesla has nothing directly to do with Elon Musk buying Twitter - TSLA stock closed down 12% on news that Musk may have to sell stock and use other holdings to stand against the loan to finalise the purchase of the social media giant.        
  • Create New...