Forex News

Momentum indicators are turning flat; Pound Sterling (GBP) could trade sideways between 1.3410 and 1.3460. In the longer run, GBP is likely in a range-trading phase between 1.3390 and 1.3520, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

GBP is likely in a range-trading phase

24-HOUR VIEW: "Two days ago, GBP rose to 1.3495 and then pulled back. Yesterday, we indicated that 'the pullback has scope to extend, but the major support at 1.3390 is unlikely to come under threat'. Instead of extending its pullback, GBP traded sideways between 1.3420 and 1.3462, closing at 1.3448, up by 0.19%. Momentum indicators are turning flat, and GBP could continue to trade sideways today, most likely between 1.3410 and 1.3460."

1-3 WEEKS VIEW: "We highlighted two days ago (13 Jan, spot at 1.3465) that the recent price action suggests that GBP 'is likely in a range-trading phase, probably between 1.3390 and 1.3520'. We continue to hold the same view for now."

Better-than-expected UK GDP and industrial production data have lifted confidence in sterling, exposing key support in EUR/GBP to a potential downside break, ING's FX analyst Chris Turner notes.

EUR/GBP vulnerable as markets reassess BoE rate-cut timing

"The UK delivered a positive set of data this morning, including a higher-than-expected monthly GDP figure for November and stronger than expected industrial production figures. A little earlier, we also had some positive news on the housing market, where estate agents are becoming a little more optimistic about sales."

"This is all happening at a time when asset managers are still running some reasonably large underweight positions in sterling. We think the sterling correction we have seen since November probably has a little further to run, especially with the risk of an upside surprise in December UK CPI released next week."

"Given the positioning, we think EUR/GBP support at 0.8645/55 looks vulnerable and the risks are building towards a breakdown to 0.8600 next week. Down there should be a good opportunity to hedge against sterling weakness in March, when we expect the Bank of England to deliver its next cut. For reference, money markets currently price the next cut in April and then again by December. We are looking at March and June for cuts."

• Silver price pulled back after hitting a fresh record high of $93.90 on Thursday.
• Safe-haven Silver loses ground after President Trump said reports suggest Iran’s crackdown killings are easing and no mass executions are planned.
• Trump refrained from new tariffs on critical mineral imports, easing trade tensions.

Silver price (XAG/USD) retreated after reaching a fresh record high of $93.90 during Asian hours earlier, currently trading around $89.40 per troy ounce, down by more than 4% during the European hours on Thursday. The grey metal retreated amid easing geopolitical concerns.

US President Donald Trump said reports suggest Iran’s crackdown-related killings are easing and that no mass executions are planned, while adding that the US would continue monitoring the situation and did not rule out possible military action.

The non-interest-bearing Silver remains under pressure as a stronger-than-expected United States (US) Producer Price Index (PPI) and Retail Sales, along with last week’s easing Unemployment Rate, reinforce expectations that the Fed will keep rates on hold in the coming months. Traders will likely monitor the weekly US Initial Jobless Claims and Philadelphia Fed Manufacturing Survey later on Thursday.

The US Census Bureau reported on Wednesday that Retail Sales rose more than expected to $735.9 billion in November, up 0.6%, following a 0.1% contraction in October and beating market expectations of a 0.4% increase. Meanwhile, the Producer Price Index (PPI) came in hot in November, with both headline and core measures reaching 3% year-over-year (YoY).

US President Donald Trump refrained from imposing new tariffs on imports of critical minerals, easing trade tensions and reducing safe-haven demand for Silver. The move avoids immediate supply disruptions and supports a firmer US dollar, keeping non-interest-bearing Silver under pressure. However, lingering policy uncertainty and strong industrial demand help limit deeper downside risks.

The safe-haven demand for precious Silver may emerge amid renewed concerns over the Fed’s independence. The Federal Reserve Chair Jerome Powell called out the Trump administration's decision to subpoena him, saying it amounted to intimidating the Fed into delivering easier monetary policy.

Euro (EUR) is likely to trade in a range between 1.1625 and 1.1660. In the longer run, EUR is still consolidating, but likely in a range of 1.1600/1.1700, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

EUR is still consolidating

24-HOUR VIEW: "When EUR was at 1.1645 in the early Asian session yesterday, we noted 'a slight increase in downward momentum'. We expected EUR to 'edge lower', but we were of the view that 'a break of 1.1615 appears unlikely'. Our view did not materialize, as EUR traded in a relatively tight range of 1.1634/1.1661, closing marginally higher by 0.01% at 1.1642. The price movements are likely part of a range trading phase. Today, we expect EUR to trade between 1.1625 and 1.1660."

1-3 WEEKS VIEW: "Two days ago (13 Jan, spot at 1.1665), we indicated that 'the weakness in EUR from early last week has stabilized'. We highlighted that EUR 'appears to have entered a consolidation phase, and for the time being, it is likely to trade between 1.1615 and 1.1730'. The price action since then still appears to be part of a consolidation, but we now expect EUR to trade in a lower and narrower range of 1.1600/1.1700."

• GBP/USD recovers its early losses and turns slightly positive to near 213.20.
• The UK economic growth turns positive after declining in the last two months.
• Japan's PM Takaichi is expected to announce a snap election next week.

The GBP/JPY pair claws back its early losses and turns slightly positive to near 213.20 during the European trading session on Thursday. The pair attracts bids as the Pound Sterling (GBP) gains, following the release of the United Kingdom (UK) monthly Gross Domestic Product (GDP) data for November.

The Office for National Statistics (ONS) showed that the economy returned to growth after contracting 0.1% in both September and October. The UK GDP growth came in at 0.3%, faster than estimates of 0.1%.

Meanwhile, factory data for November has also come in stronger than expected. Month-on-month (MoM) Manufacturing Production rose at a robust pace of 2.1% against estimates of 0.5% and the October reading of 0.4%. In the same period, Industrial Production rose 1.1%, strongly than expectations of 0.1%, but slower than the prior reading of 1.3%.

Going forward, the major trigger for the Pound Sterling will be the UK employment and Consumer Price Index (CPI) data scheduled for next week. Investors will pay close attention to the data to get fresh cues on the Bank of England’s (BoE) monetary policy outlook.

During the European trading session, the Japanese Yen (JPY) struggles to hold ground regained earlier in the day. The Japanese currency attracted bids amid fears of intervention by Tokyo counter one-way excessive moves. However, the broader outlook of the JPY remains uncertain on expectations of a looser fiscal and monetary policy this year.

Additionally, hopes of the announcement of a snap election by Prime Minister Sanae Takaichi next week are also keeping Yen’s recovery capped. Market experts believe Japan’s budget to unveil big spending plans to boost economic growth.