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

 

British Pound Talking Points:

• It was a week of strength for GBP/USD, with the pair making a run at the 1.2500 level before resistance came into play.
• GBP/JPY staged a late-week reversal and set a fresh four-month-low, and fears of greater carry unwind in the Yen could continue to highlight vulnerability in the pair.
• EUR/GBP put in its third consecutive bearish week, following a reversal at the .8448 level looked at earlier in January. Support was tested at the .8300 handle and, shorter-term, there could be growing scope for a pullback in the sell-off.

It’s been a green week for Cable, even with the Bank of England cutting rates by 25 bps. But surprisingly two MPC members voted for a 50 bp cut and that helped to weigh on the currency and the pair in late-week trade, with GBP/USD holding below the 1.2500 psychological level.

From the weekly chart, however, this isn’t a dire picture, and as I said on Tuesday, this could make for a more bullish argument than EUR/USD. That would also seem to mesh with the fundamental backdrop which, right now, is being dominated by tariff talks. And Europe seems to be in a vulnerable place for President Trump, as he had said last weekend that tariffs on Europe are coming ‘pretty soon.’

When markets opened for trading on Sunday EUR/USD showed a violent gap-down, with buyers holding lows just slightly above the January low around 1.0200.

In GBP/USD though, support held at 1.2250 and this looks like a higher-low, at this point.

GBP/USD Weekly Price Chart

Chart prepared by James Stanley; data derived from Tradingview

 

GBP/USD Daily

 

The early part of the week was more positive for the pair than the last two days, when the BoE rate cut weighed, a bit, helping to erase the bulk of the prior gain that had showed after the Monday bounce. But the techs have remained as somewhat clean, with a higher-high on Wednesday going along with that higher-low on Monday.

It’s clear that 1.2500 is the next major hurdle for bulls to mount above, and if they can, the door opens for a test of 1.2619. For support, ideally, the 1.2353 level would hold on a daily close basis, as a failure to do so would look like bulls are shying away from supporting pullbacks in the pair.

GBP/USD Daily Chart

Chart prepared by James Stanley; data derived from Tradingview

 

GBP/JPY

 

With a dovish Bank of England and an increasingly hawkish Bank of Japan, it’s a surprise that GBP/JPY has held up as well as it has. But that seems to be shifting as this week has marked a push below a couple of big items of support, including the 190.00 level and the bullish trendline taken from the September 2022 lows. There’s also the Fibonacci retracement at 187.96, and that was traded through on Friday for the first time since September of last year.

GBP/JPY Weekly Chart

Chart prepared by James Stanley; data derived from Tradingview

 

GBP/JPY Daily

 

This week was a change-of-pace for GBP/JPY as the early part of the week saw bulls defending some big areas on the chart. But the latter part of the week, particularly after the BoE meeting, the pair just unraveled-lower.

The 190 level that held the lows on Monday is now potential resistance for pullback setups. If we do se greater unwind drives around the Japanese Yen, which is certainly possible given the past week’s price action, GBP/JPY looks similarly vulnerable, with next key support plotting around the 185.00 level.

GBP/JPY Daily Chart

Chart prepared by James Stanley; data derived from Tradingview

 

EUR/GBP

 

EUR/GBP is not a pair that I normally think of for high levels of volatility, or even trends, really. But so far in 2025 the pair has impressed and the techs have been fairly clean.

It was a little less than a month ago that I warned of the .8448 level, which came into play in the following week. Perhaps more to the point, the .8500 level lurking overhead is a major psychological level, and it seemed to have an impact on price without actually having to trade, as that .8448 level held highs for eight of nine days until, eventually, sellers were able to take-over.

This is that greater GBP-strength versus the year that I spoke of earlier regarding comparisons between GBP/USD and EUR/USD, and in the last week of January, that remained a large factor, capped with a strong sell-off this Monday to test the .8300 handle in the pair.

EUR/GBP Daily Chart

 

Chart prepared by James Stanley; data derived from Tradingview

 

EUR/GBP Bigger Picture

 

Given the importance of tariffs on both Europe and the U.K., should President Trump take a stern look at European tariffs while avoiding the U.K., the argument for greater Euro weakness could continue to take hold.

From the weekly chart, however, there could be a building case for a larger reversal setup. The .8311-.8328 zone of prior support-turned-resistance helped to hold sellers at bay this week. It’s been three consecutive red weeks, but the extended underside wick on last weeks candle illustrates at least some passiveness from bears, and that’s something that could continue. From a fundamental perspective, that would seem to require either Trump softening his tone on European tariffs, or Trump taking a harder look at the U.K. and starting to talk up the potential on tariffs there. I certainly wouldn’t want to rule that scenario out at this point.

EUR/GBP Weekly Chart

Chart prepared by James Stanley; data derived from Tradingview

 

--- written by James Stanley, Senior Strategist