Forex News

ING’s Francesco Pesole notes the Pound has been resilient against the Dollar and EUR/GBP has fallen about 0.5% since Friday, partly on positioning ahead of the Bank of England meeting. However, he sees risks skewed dovishly for the BoE, doubts EUR/GBP can fall much further, highlights multiple upside risks in coming weeks, and maintains a 0.87 target for EUR/GBP.

BoE risks seen skewed dovish

"The pound has shown good resilience to the dollar’s advance. EUR/GBP is down by around 0.5% since Friday, perhaps on some precautionary positioning ahead of the Bank of England meeting on Thursday."

"But as discussed in our preview, we think the risks are actually on the dovish side this week. Unlike the ECB, we suspect BoE doves will hold their ground and stress that there is no evidence price pressures are extending beyond energy prices."

"We also see some risk that Governor Andrew Bailey himself pushes back against aggressive market pricing (45bp by December, 100bp by June)."

"We struggle to see EUR/GBP falling much further from here. Most risks appear on the upside in the coming weeks, from the monetary policy story mentioned above to potential fiscal headlines ahead of the late October budget to growing pressure on Downing Street to allow independence referendums in Scotland, Wales and Northern Ireland."

"Our target remains 0.87 for EUR/GBP."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

• GBP/JPY edges higher as traders gear up for the BoE and BoJ policy decisions later this week.
• The cross retains a bearish bias below key moving averages, while momentum indicators remain weak.
• Immediate support sits near 207, while the 209.32-211.79 region caps the upside.

GBP/JPY trades on the front foot on Tuesday but remains confined to a narrow range following the Japanese Yen’s (JPY) sharp rally earlier this month. Price action stays subdued as traders brace for major central bank events, with the Bank of England (BoE) announcing its policy decision on Thursday and the Bank of Japan (BoJ) following on Friday. At the time of writing, the cross trades near 209, up 0.32% on the day.

The BoE is widely expected to leave interest rates unchanged at 3.75% for a sixth consecutive meeting. Attention will therefore turn to the vote split after policymakers voted 6-3 at the previous meeting, with three members favouring a 25-basis-point (bps) hike to counter inflation risks from elevated Oil prices.

Even with rates unchanged, a more hawkish vote split could lift the British Pound (GBP). High energy prices linked to the war in the Middle East continue to cloud the inflation outlook, leaving markets positioned for a rate increase in the coming months.

On the other hand, traders are fully convinced that the BoJ will raise interest rates for the second time this year, taking the policy rate to 1.25%. Expectations that the central bank could accelerate the pace of tightening, rather than waiting around six months between moves, drove sharp gains in the Japanese Yen at the start of September.

GBP/JPY remains down roughly 3.50% so far this month. The cross could face fresh selling pressure if the BoJ signals that additional hikes may come at a faster pace, while a cautious policy outlook could allow GBP/JPY to recover some of its recent losses.

Technical analysis

On the daily chart, GBP/JPY retains a bearish near-term bias as it holds beneath a dense band of moving average and Fibonacci resistances. Momentum stays weak, with the Relative Strength Index (RSI) recovering only modestly from oversold territory near 33 and the Moving Average Convergence Divergence (MACD) still negative, while the Average Directional Index (ADX) around 38 signals a strong downtrend.

On the topside, initial resistance is seen at the 23.6% Fibonacci retracement at 209.32, followed by a tight Fibonacci cluster between 210.69 (38.2%) and 211.79 (50.0%), which could check any rebound.

A stronger recovery would bring the 61.8% retracement at 212.90 and the 200-day Simple Moving Average (SMA) at 213.11 into focus. The 214.47-214.92 area, containing the 78.6% retracement and the 100-day and 50-day SMAs, forms a firm resistance zone. Only a sustained break above this band would ease the current bearish tone.

On the downside, the recent swing low around 207 acts as immediate support. A decisive break below this level would reinforce the bearish bias and expose the 204.50 area, followed by the psychological 200 mark.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

• US private employers added an average of 16.25K jobs per week in late August.
• Job gains pick up momentum, adding to the previous week’s uptick.

Private-sector hiring in the US has gained further pace in later August. According to the NER Pulse, the weekly companion to the ADP National Employment Report, companies added an average of 16.25K jobs per week in the four weeks ending August 29.

That marks a decent rebound from the prior reading (12.25K), showing extra recovery in hiring.

Market reaction

The Greenback remains on the positive foot, trading in the upper end of its recent range. That said, the US Dollar Index (DXY) is hovering around the 99.60 area in the wake of the release, adding to the ongoing multi-day bullish streak.

Royal Bank of Canada (RBC) analysts highlight that Canada’s economy has rebounded, with Gross Domestic Product (GDP) growth improving in Q2 2026 and per-capita gains supported by a lower unemployment rate. They note that U.S. tariffs affect only a small share of trade, while consumer spending is underpinned by stronger labour markets and wage growth. The Bank of Canada is projected to stay on hold through 2026, with potential rate hikes from early 2027.

Resilient growth with policy on hold

"The Canadian economy shows resilience despite headwinds: GDP growth rebounded in Q2 2026, and per-capita growth improved significantly when adjusted for demographic pressures, with the unemployment rate dropping to a two-year low even with elevated trade tensions and rising energy costs."

"Escalation of U.S. tariffs remains contained, but poses ongoing risks: New 50% U.S. tariffs on 5% of Canadian imports will have a significant impact on targeted sectors, but leave most Canadian exports (and imports) crossing the border duty free."

"Consumer spending remains firm as labour markets improve: Household savings rates rose in Q2 despite higher energy costs, supported by higher government transfers, but also the largest wage and salary growth in nearly two years (1.4%)."

"RBC card transactions indicates resilience in consumer spending through summer despite higher energy costs."

"The Bank of Canada expected to remain on hold in 2026, but risks are tilted to earlier hikes: High energy prices have not yet shown significant signs of bleeding through to broader inflation, leaving the central bank with the option to remain patient."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

UOB’s Quek Ser Leang highlights that USD/CHF extended gains to 0.8195 before consolidating, with intraday trade now expected between 0.8150 and 0.8195. He sees strong but overbought momentum and says a sustained move to 0.8245 requires a clear break and hold above 0.8205. Maintaining support above 0.8130 is seen as key to preserving the bullish bias.

Bulls need 0.8205 break

"24-HOUR VIEW: After USD rose more than we expected last Friday, we highlighted the following yesterday: “We underestimated the upward momentum, as USD rose more than expected to 0.8170 before closing on a firm note at 0.8161 (+0.44%). Conditions remain overbought, but strong upward momentum suggests USD could test 0.8185 today. Any further advance is highly unlikely to reach the significant resistance at 0.8205. To keep the momentum going, USD must hold above 0.8140, with minor support at 0.8150.” Our assessments turned out to be correct, as after rising to a high of 0.8195, USD pulled back to close modestly higher at 0.8171 (+0.12%). The pullback amid slowing momentum suggests that instead of continuing to advance today, USD is more likely to consolidate between 0.8150 and 0.8195."

"1-3 WEEKS VIEW: We turned positive on USD late last week (see annotations in the chart below). Yesterday (14 Sep, spot at 0.8165), we highlighted that “while upward momentum continues to build, it is currently unclear whether it is sufficient for USD to rise to the significant resistance at 0.8205.” USD subsequently rose to 0.8195, but while momentum continues to build, given the overbought conditions, USD must break and hold above 0.8205 before a move to 0.8245 can be expected. To keep the momentum going, USD must not break below 0.8130 (‘strong support’ level was at 0.8110 yesterday)."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)