• GBP/USD falls 0.93%, hitting a session low of 1.2359 after BoE’s unexpected rate decision.
• BoE’s dovish stance intensifies with forecasts of significant easing by end of 2025, stirring market reactions.
• Contrast in Fed and BoE policies likely to favor USD strength.

The Pound Sterling fell during Thursday’s North American session, down 0.79% after the Bank of England (BoE) reduced the Bank Rate by 25 basis points. Therefore, the GBP/USD tumbled below 1.2400 and hit a daily low of 1.2359. At the time of writing, the pair trades at 1.2405.

GBP/USD nosedives below 1.2400 following a surprising 25 basis point cut by the Bank of England

As expected, the BoE lowered rates to 4.50%, though surprisingly. Two members voted for a “larger size” rate cut, with Catherine Mann, one of the hawkish members, being one of them. Following the UK’s Central Bank decision, investors rushed to price 65 basis points (bps) of easing towards the end of 2025.

Additionally, the BoE updated their forecasts. The British economy is expected to grow by 0.75% and inflation to rise from 2.5% to 3.7%. BoE’s Governor Andrew Bailey said he hopes to be able to cut rates further, yet they would take their decisions “meeting by meeting.” He added that although headline inflation edged higher, he sees “continued gradual easing of underlying inflationary pressures.”

Across the pond, US Initial Jobless Claims missed the mark for the week ending February 1. The number of Americans filing for unemployment benefits rose by 219K, up from 208K the previous week and exceeded forecasts of 213K.

Given the backdrop, further GBP/USD downside is seen. The Federal Reserve is expected to keep rates on hold while the BoE continues to ease policy. Therefore, the divergence amongst Central Banks might benefit the Greenback.

The UK economic docket will comprise BoE officials crossing the wires this week. In the US, nonfarm payroll figures for January and Fed speakers could dictate the direction of GBP/USD.

GBP/USD Price Forecast: Technical outlook

After the BoE’s decision, the GBP/USD hit a three-day low of 1.2359 before recovering some ground. Nevertheless, failure to clear the 50-day Simple Moving Average (SMA) of 1.2497 has opened the door for further downside. A daily close below 1.2400 would shift the trend downwards and pave the way for challenging the February 3 low of 1.2248.

On the other hand, if GBP/USD stays above 1.2400, buyers must clear the 50-day SMA to test the 1.2500 mark in the near term.

• EUR/USD drops on Thursday, slipping to 1.0355 after recent gains.
• After rising above the 20-day SMA earlier in the week, the pair faces renewed selling pressure and sellers might test its strength.
• A loss would push the pair towards 1.0300.

The EUR/USD pair pulled back on Thursday, declining by 0.45% to 1.0370 as bullish momentum faded. After climbing above the 20-day Simple Moving Average (SMA) at the start of the week, the pair now faces renewed bearish pressure, with sellers attempting to push it back toward this key support level. However, the overall outlook remains bearish with the pair well below the 100 and 200-day SMA which stand around 1.0600 and 1.0700.

Technical indicators suggest a weakening in bullish traction. The Relative Strength Index (RSI) has sharply declined to 49, moving into negative territory, signaling that upside momentum is losing steam. Meanwhile, the Moving Average Convergence Divergence (MACD) histogram remains flat with green bars, indicating indecisiveness in market sentiment.

If selling pressure persists, EUR/USD could test the 20-day SMA, currently near 1.0360. A break below this level would open the door for further declines toward 1.0300. On the other hand, if buyers regain control, resistance lies at 1.0400, followed by the key 1.0450 zone. For now, the short-term outlook hinges on whether the pair can hold above its 20-day SMA.

EUR/USD daily chart

• The Canadian Dollar churned on Thursday, holding flat against the Greenback.
• PMI figures from Canada contracted sharply in January, limiting Loonie gains.
• Key US NFP and Canadian employment figures are due on Friday.

The Canadian Dollar (CAD) spun in a tight circle on Thursday, churning chart paper near 1.4300 against the US Dollar (USD) as markets gear up for another Nonfarm Payrolls (NFP) Friday. Markets are treading water near familiar levels as investors shrug off the early week’s trade war fears and resume focusing on hopes for future Federal Reserve (Fed) rate cuts.

Canadian Purchasing Managers Index (PMI) figures for January sharply missed the mark on Thursday. Canadian Net Change in Employment and Average Hourly Wages numbers are due on Friday but will be overshadowed by the much larger US NFP jobs data package.

Daily digest market movers: Canadian Dollar flattens ahead of NFP

• The Canadian Dollar has fought back from 21-year lows this week, but remains trapped in familiar consolidation territory against the Greenback.
• Canada’s Ivey PMI for January contracted sharply on a seasonally adjusted basis, falling to a four-year low of 47.1.
• US tariffs on Mexico and Canada have been kicked down the road by another 30 days, and market tensions are loosening for the time being.
• US tariffs on China are still in place, as are reciprocal tariffs on the US from China, but these tit-for-tat import fees are largely symbolic and markets are expected to circumvent them quickly.
• Canada is expected to add far fewer jobs in January compared to December, down to 25K from 90.9K, and the Canadian Unemployment rate is forecast to tick up to 6.8% from 6.7%.
• Friday’s US NFP is likewise expected to shift lower to 170K net new jobs additions from 256K, but bumper labor prints from earlier in the week could signal an upside surprise.

Canadian Dollar price forecast

With key data due to wrap up the trading week, the Canadian Dollar is stuck back in familiar consolidation territory against the US Dollar. USD/CAD remains hung up on the 1.4300 handle, at the bottom end of a choppy sideways grind that has kept the pair traveling horizontally since mid-December.

The Loonie tumbled early this week to a 21-year low against the Greenback, sending USD/CAD to a two-decade high near 1.4800, but the move was unsustainable and the pair is now back to its middling ways. Price action is drawing into the midrange at the 50-day Exponential Moving Average (EMA), and it will take a material shift in markets to punch in new technical levels.

USD/CAD daily chart

• The US Dollar Index holds below 108.00 as mixed economic indicators raise concerns ahead of Friday’s employment report.
• ADP reports a stronger-than-expected increase in private sector employment for January, while Initial Jobless Claims also rise.
• Investors anticipate the upcoming Nonfarm Payrolls data to gauge the Federal Reserve’s future monetary policy decisions.

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against a basket of currencies, struggles to hold its recent gains, trading below 108.00 on Thursday. Mixed United States (US) economic data fuels uncertainty ahead of the January employment report due on Friday. Investors remain cautious as labor market signals provide conflicting outlooks, with ADP data showing strength while jobless claims rise.

Daily digest market movers: US Dollar index remains soft after mixed data

• ADP reports a stronger-than-expected private sector job increase of 183,000 in January, exceeding the 150,000 consensus.
• On Thursday, Initial jobless claims rise to 219,000, surpassing expectations of 213,000 and up from last week’s 208,000, signaling potential labor market softening.
• Continuing jobless claims increase to 1.886 million, above the forecast of 1.87 million and last week’s 1.858 million.
• Investors now focus on Friday’s Nonfarm Payrolls report, projected to show 170,000 new jobs in January, down from December’s 256,000.
• The CME FedWatch tool shows a nearly 90% probability of the Fed keeping rates steady in March, reinforcing expectations of a prolonged hold. NFP data will dictate the pace of the markets bets.

DXY technical outlook: Indicators show growing bearish momentum

The US Dollar Index struggles to maintain recent gains, slipping below the 20-day Simple Moving Average (SMA) at 108.50. The Relative Strength Index (RSI) remains below 50, signaling increasing bearish traction. The DXY now looks poised to test the psychological support level at 107.00, with downside risks growing as mixed economic data clouds the Fed’s hawkish policy outlook.

Here is what you need to know on Friday, February 7:

The US Dollar Index (DXY) managed to reclaim some ground lost helped by a mild bounce in US yields and a hiccup in the risk-linked universe. The January Nonfarm Payrolls will be the salient event at the end of the week, seconded by the preliminary Michigan Consumer Sentiment, and Wholesale Inventories.

EUR/USD saw its upside momentum somewhat curtailed, retreating to the mid-1.0300s on the back of the better tone in the US Dollar. Germany’s Balance of Trade results will be released along with the speech by the ECB’s De Guindos.

GBP/USD tumbled to three-day lows and revisited the 1.2360 region on the back of the BoE’s rate cut and USD buying. The BBA’s Mortgage Rate, the Halifax House Price Index and the speech by the BoE’s Pill are all due across the Channel.

USD/JPY kept its decline well in place, retesting two-month lows in the 151.80 region on the back of intense buying interest around the Japanese yen. Household Spending figures, and the advanced Coincident Index and Leading Economic Index will be published.

AUD/USD’s weekly recovery came short of the 0.6300 hurdle, sparking a corrective decline on Thursday on the back of the widespread gains in the US Dollar.

Further weakness saw prices of the American WTI approach the key contention zone around $70.00 per barrel, or fresh five-week lows.

Gold prices halted their five-day bullish move on Thursday, coming under fresh selling pressure a day after hitting an all-time peak past the $2,880 mark per ounce troy. Silver prices followed suit, dropping markedly to the sub-$32.00 mark per ounce.

• Aussie dips near 0.6280 amid trade gloom.
• RBA likely to cut rates to 4.1%, capping Aussie gains.
• Markets await US labor data for fresh momentum.
• Soft Trade Balance data from Australia also affected the Aussie.

The Australian Dollar (AUD) softens to around 0.6280 in Thursday’s American session, tallying nearly 0.30% losses. Expectations of a Reserve Bank of Australia (RBA) rate cut and revived United States (US)-China tariff anxieties hamper the pair’s upside. Meanwhile, attention shifts to the United States labor market report on Friday, with the Aussie bracing for further volatility.

Daily digest market movers: Aussie edges lower as US Dollar recovers

• On the local front, Australia’s trade surplus shrank to 5,085M in December from 6,792M, below expectations of 7,000M, as exports rose just 1.1% while imports surged 5.9%.
• Markets now price a 95% chance of an RBA rate cut from 4.35% to 4.10%, undermining the Aussie’s resilience.
• US President Donald Trump floats the idea of higher tariffs on the Eurozone and China, pressuring the China-linked Australian Dollar.
• The US Dollar finds support from hawkish Federal Reserve expectations, although weaker labor data could curb USD demand.
• Investors are now focusing on Friday’s Nonfarm Payrolls report, projected to show 170,000 new jobs in January, down from December’s 256,000.
• Jobless Claims raised concerns as Initial claims rose to 219,000, surpassing expectations of 213,000 and up from last week’s 208,000, signaling potential labor market softening.
• Continuing jobless claims increase to 1.886 million, above the forecast of 1.87 million.

AUD/USD technical outlook: Mild retracement stalls near 20-day SMA

The pair declined to 0.6280 on Thursday, after surging past the 20-day Simple Moving Average at approximately 0.6230. The Relative Strength Index (RSI) stands at 55, still in positive territory but declining. Meanwhile, the Moving Average Convergence Divergence (MACD) histogram shows decreasing green bars, hinting at waning bullish momentum.

Although the Aussie’s near-term support may hold above 0.6200, dovish RBA expectations and renewed tariff worries could keep any further advances below the 0.6300 resistance in check. A hold of the 20-day SMA would reject any bearish threats, at least for the short term.

• NZD/USD dips on Thursday, settling at 0.5675 after testing key support.
• Sellers attempted to push the pair below the 20-day SMA near 0.5640 but failed.

The NZD/USD pair softened on Thursday, edging 0.21% lower to 0.5675, but managed to hold above its 20-day Simple Moving Average (SMA). Bears attempted to break below the key support around 0.5640 but faced rejection, suggesting that buying interest remains resilient despite the slight pullback.

Technical indicators reflect a mixed outlook. The Relative Strength Index (RSI) declined sharply to 54, signaling a loss of momentum but still staying in positive territory. Meanwhile, the Moving Average Convergence Divergence (MACD) histogram remains flat with green bars, indicating a temporary pause in bullish momentum rather than a confirmed shift toward sellers.

Looking ahead, as long as NZD/USD holds above the 20-day SMA, currently near 0.5640, the broader bullish bias remains intact. A sustained break above 0.5700 could trigger further upside toward 0.5735, while a close below the SMA could expose the pair to a deeper retracement toward 0.5600.

NZD/USD daily chart

• USD/CHF rebounds to 0.9048, gaining momentum after forming a “tweezers bottom” pattern at critical support levels.
• Upcoming Nonfarm Payroll figures heighten market focus, following unexpected rise in unemployment claims.
• Technical outlook suggests potential range trading, with a critical resistance at 0.9100 and support near 0.8998.

The USD/CHF reversed course and trimmed some of its weekly losses, posting gains of over 0.36%. At the time of writing, it was exchanged at 0.9048.

US jobs data showed that more people than expected applied for unemployment benefits, which could be linked to the Los Angeles wildfires and the weather. In the meantime, traders braced for the release of US Nonfarm Payroll figures on Friday.

USD/CHF Price Analysis: Technical outlook

The USD/CHF reversed its course, forming a “tweezers bottom” chart pattern. The pair found strong support at 0.8998 at the 50-day Simple Moving Average (SMA). If buyers achieve a daily close above 0.9000, look for some range-bound trading within the 0.9040 – 0.9100 area. A breach of the top of the range will expose the February 3 high at 0.9195.

Conversely, if the USD/CHF price closes below the 50-day SMA daily, further downside is seen, as the next support would be the November 22 daily high at 0.8957, followed by 0.8900.

USD/CHF Price Chart – Daily

• USD/CAD trades with mild gains near 1.4305 in Thursday’s late American session. 
• Canada’s Ivey PMI shows activity decreasing in January. 
• Investors will closely monitor the US and Canadian labour market reports, which are due later on Friday. 

The USD/CAD pair posts modest gains around 1.4305 during the late American session on Thursday, bolstered by a mild bounce in US yields. The markets might turn cautious amid the ongoing uncertainty surrounding US President Donald Trump’s trade policies and ahead of the release of the US and Canadian January labour market reports.

Trump delayed his orders to impose 25% tariffs on Canada for 30 days. However, the threat of US trade tariffs remains in place and any signs of escalating renewed trade tensions between the US and Canada could exert some selling pressure on the Loonie.

Additionally, Thursday’s downbeat Canadian economic data weighed on the Canadian Dollar (CAD). Canada’s Ivey Purchasing Managers Index (PMI) data showed that Canadian economic activity contracted for the first time in five months in January as employment increased at a slower rate and prices rose.

Investors will keep an eye on the Canadian employment reports. Canada is projected to add far fewer jobs in January compared to December, down to 25K from 90.9K, and the Canadian Unemployment rate is estimated to tick up to 6.8% from 6.7%.

On the US front, economists expect the US economy to have added around 170,000 jobs in January, marking a significant slowdown from 256,000 gain in December. The unemployment rate is forecast to hold steady at 4.1%, suggesting continued resilience in the labour market despite recent economic headwinds.