• GBP/USD briefly tumbled back below 1.2400 after the BoE cut rates again.
• Despite the rate cut, BoE tones struck a hawkish chord, crimping further bets.
• US NFP Friday looms large ahead to cap off the trading week.

GBP/USD shuddered on Thursday, punching in a technical rejection from key averages and testing below the 1.2400 handle. The Bank of England (BoE) trimmed interest rates by another 25 bps, but struck a hawkish tone that saw rate markets tune down their bets of further rate cuts through the remainder of 2025.

According to rate markets, the BoE will likely make another two or three rate cuts through the year. All nine members of the Monetary Policy Committee (MPC) voted for a rate cut, with seven voting for a 25 bps rate trim and two particularly-dovish members voting for a double-cut for 50 bps. Despite the accelerated eagerness of policymakers to deliver a February rate cut, markets only expect another 70 or so basis points to be taken off the BoE’s reference rate this year.

Another Nonfarm Payrolls (NFP) jobs data dump looms on Friday. Net job additions are expected to ease to 170K in January, down from December’s print of 256K. Revisions to older data will be closely watched this week. Post-print revisions drifted toward the stronger side during 2024, frustrating market participants hoping for cracks in the US employment landscape to help push the Federal Reserve (Fed) toward more rate cuts.

GBP/USD price forecast

Thursday’s bearish pullback saw GBP/USD price in a technical rejection of the 50-day Exponential Moving Average (EMA), touching an intraday low near 1.2350. The pair settled the day a little south of 1.2450, but further bearish momentum could be on the cards as bulls struggle to sustain momentum.

GBP/USD daily chart

• EUR/USD remains stuck near the 1.0400 handle heading into Friday.
• European Retail Sales failed to kickstart Fiber trading.
• US NFP jobs data remains the key focus for the trading week.

EUR/USD churned some chart paper on Thursday, testing to the low side but wrapped up the day remaining stubbornly stuck near the 1.0400 handle. Euro bidders were entirely uninspired by Pan-EU Retail Sales figures that came in exactly as expected. Greenback traders treaded water ahead of Friday’s fresh print of US Nonfarm Payrolls (NFP) figures.

European Retail Sales growth came in at 1.9% YoY in December, matching median market forecasts and gaining slight ground over the revised previous figure of 1.6%. Despite the upswing in annualized figures, MoM Retail Sales actually contracted, printing at -0.2% compared to the previous month’s flat print of 0.0%, which was also revised slightly lower.

Economic data from the US was primarily mid-tier on Thursday, with weekly Initial Jobless Claims rising to 219K for the week ending January 31. Analysts had anticipated a figure of 213K, while the prior week’s number was slightly adjusted to 208K.

A new release of Nonfarm Payrolls (NFP) is set for Friday, with net job additions projected to decrease to 170K for January, compared to December’s figure of 256K. This week will see close scrutiny of revisions to older data. Historically, post-release revisions have tended to show stronger results in 2024, frustrating market participants who hoped to see weaknesses in the US job market that might encourage the Federal Reserve (Fed) to enact further rate cuts.

EUR/USD price forecast

EUR/USD saw some volatility on Thursday during the early hours, but ended the day down a scant 0.2% as price action remains stuck to the 1.0400 handle. Bids remain capped by the 50-day Exponential Moving Average (EMA) near 1.0440. Fiber managed to eke out a bullish recovery after the early week’s plunge toward the 1.0200 handle, but topside momentum remains limited.

EUR/USD daily chart

• NZD/USD trades in positive territory around 0.5680 in Friday’s Asian session. 
• The employment report keeps the RBNZ on track to cut by 50 bps in February. 
• Fed officials said uncertainty creates the environment for the Fed to slow the pace of cuts.

The NZD/USD pair trades firmer near 0.5680 during the Asian trading hours on Friday. However, the upside for the pair might be limited ahead of the highly anticipated US Nonfarm Payrolls (NFP) data for January, which is due later on Friday.

China filed a World Trade Organization challenge on Wednesday against US President Donald Trump’s new 10% tax on Chinese imports and withdrawal of a duty-free exemption for low-value packages, citing “protectionist” acts that violate WTO regulations. Investors will closely monitor the development surrounding renewed trade war tensions between the US and China, the world’s two largest economies. Any signs of escalation could weigh on the China-proxy Kiwi, as China is a major trading partner to New Zealand.

The New Zealand employment data for the fourth quarter (Q4) will keep the Reserve Bank of New Zealand (RBNZ) on track to cut the Official Cash Rate (OCR) this month. This, in turn, might further weigh on the New Zealand Dollar (NZD). The markets are now pricing in nearly 92% odds that the RBNZ will deliver a 50 basis points (bps) rate cut to 3.75% on February 19. It would be the third consecutive jumbo cut.

The hawkish stance from the Federal Reserve (Fed) officials might provide some support to the Greenback. Chicago Fed President Austan Goolsbee noted on Thursday that the uncertainty makes the environment for the Fed foggier, a reason to slow the pace of cuts. Meanwhile, Fed Vice Chairman Philip Jefferson said late Tuesday that they were facing uncertainty around Trump’s policies, adding that the robust economy would allow them to adopt a cautious approach to further policy-easing.

• The Australian Dollar could depreciate due to market caution ahead of US Nonfarm Payrolls release on Thursday.
• The AUD receives downward pressure from increased risk aversion amid the US-China trade situation.
• US Initial Jobless Claims rose to 219K the previous week, against the expected 213K and 208K prior.

The Australian Dollar (AUD) remains weak against the US Dollar (USD) for the second consecutive day on Friday. The AUD/USD pair faces additional downward pressure due to risk-off sentiment fueled by escalating US-China trade tensions.

China, Australia’s key trading partner, retaliated against the new 10% US tariff that took effect on Tuesday. However, on Monday afternoon, US President Donald Trump stated that he would likely speak with China within 24 hours. Trump also warned, “If we can’t reach a deal with China, the tariffs will be very, very substantial.” Despite this, no further updates have emerged.

Markets now price a 95% probability of a Reserve Bank of Australia (RBA) rate cut from 4.35% to 4.10% in February, further weakening the AUD’s resilience. The RBA has kept the Official Cash Rate (OCR) at 4.35% since November 2023, emphasizing that inflation must “sustainably” return to its 2%-3% target range before considering any policy easing.

Australian Dollar could decline amid market caution ahead of US jobs report

• The US Dollar Index (DXY), which measures the US Dollar’s value against six major currencies, rises to near 107.70 at the time of writing. The Greenback could receive support as sentiment turns cautious ahead of a key US jobs report. Traders brace for Friday’s US Nonfarm Payrolls (NFP) data, which is expected to shape the Federal Reserve’s (Fed) monetary policy direction.
• US Initial Jobless Claims rose to 219K for the week ending January 31, as reported by the US Department of Labor (DoL) on Thursday. This print surpasses initial estimates of 213K and was higher than the previous week’s revised tally of 208K (from 207K).
• The US ISM Services PMI eased to 52.8 in January from 54.0 (revised from 54.1) in December. This reading came in below the market consensus of 54.3.
• Federal Reserve Bank of Dallas President Lorie Logan made headlines late Thursday, stating that while inflation progress has been significant, the US labor market remains too strong for the Fed to consider rate cuts in the near future. Logan also acknowledged that even if inflation reaches the 2% target, it may not be sufficient on its own to prompt a rate reduction.
• On Thursday, Federal Reserve Vice Chair Philip Jefferson expressed his satisfaction with keeping the Fed Funds rate at its current level, stating that he would assess the overall impact of Trump’s policies before making further decisions. He also emphasized that the Fed’s rate remains restrictive for the economy, even with a 100-basis-point decline.
• President Trump has agreed to a 30-day suspension of the proposed 25% tariffs on Canadian and Mexican imports. This decision comes after Canadian Prime Minister Justin Trudeau and Mexican President Claudia Sheinbaum committed to enhancing border security measures to address concerns over illegal immigration and drug trafficking.
• China’s Commerce Ministry announced that it will impose a 15% tariff on US coal and liquefied natural gas (LNG) imports, along with an additional 10% tariff on crude Oil, farm equipment, and certain automobiles. Additionally, to “safeguard national security interests,” China is implementing export controls on tungsten, tellurium, ruthenium, molybdenum, and related products.
• Australia’s trade surplus fell to 5,085M in December, missing the expected 7,000M and down from the previous surplus of 6,792M. Exports increased by 1.1% MoM, slowing from November’s 4.2% rise, while imports surged 5.9% MoM, up from 1.4% in the prior month.
• Australia’s Judo Bank Composite PMI climbed to 51.1 in January from 50.2 in December, reflecting modest growth in private sector activity. Meanwhile, the Judo Bank Services PMI rose to 51.2 from 50.8, marking the twelfth consecutive month of expansion in the services sector. Although growth was moderate, it was the strongest since August.

Australian Dollar remains steady below 0.6300, initial support appears at nine-day EMA

AUD/USD hovers near 0.6290 on Friday, maintaining position above the nine- and 14-day Exponential Moving Averages (EMAs) on the daily chart, signaling stronger short-term bullish momentum. Additionally, the 14-day Relative Strength Index (RSI) remains above the 50 level, reinforcing the bullish trend.

On the upside, the AUD/USD pair could test the seven-week high of 0.6330, last reached on January 24.

Immediate support lies at the nine-day EMA near 0.6260, followed by the 14-day EMA at 0.6254. A break below these levels could weaken the bullish outlook, potentially driving the AUD/USD pair toward 0.6087—the lowest level since April 2020, recorded on February 3.

AUD/USD: Daily Chart

• The Indian Rupee flatlines in Friday’s Asian session. 
• Rising RBI rate cut bets, weakness of Asian peers and uncertainties could undermine the INR. 
• RBI’s interest rate decision will be closely watched on Friday. 

The Indian Rupee (INR) holds steady after falling to a fresh all-time low in the previous session. The local currency remains vulnerable amid expectations of a rate cut by the Reserve Bank of India (RBI). Furthermore, a broader decline among Asian currencies, the uncertainties surrounding US trade tariffs and continued portfolio outflows might undermine the INR.

Nonetheless, the routine intervention by the RBI to sell US Dollar via state-run banks might help limit the INR’s losses. The RBI interest rate decision on Friday will be in the spotlight. Investors will also scrutinize the statement from the new RBI Governor Sanjay Malhotra to assess the direction of the central bank’s monetary policy. The attention will shift to the US labour market data later in the day, including Nonfarm Payrolls (NFP), Unemployment Rate and Average Hourly Earnings.

Indian Rupee steadies ahead of RBI rate decision

• The RBI is expected to cut the interest rate by 25 basis points (bps) to 6.25% at the policy meeting concluding on Friday, in what would be its first rate cut in nearly five years.
• “The delay in implementation of universal tariffs by the incoming U.S. administration provides some tactical space for RBI to prioritize domestic growth… and space to cut policy rates,” said Ruhul Bajoria, an economist at Bank of America in India.
• Most of the economists surveyed by Bloomberg anticipate that the Indian central bank will lower the benchmark repurchase rate by at least 25 basis points (bps) to 6.25% on Friday.
• Chicago Fed President Austan Goolsbee noted on Thursday that the uncertainty makes the environment for the Fed foggier, a reason to slow the pace of cuts.
• Dallas Fed President Lorie Logan said that while inflation progress has been significant, the US labor market remains far too firm to push the Fed into rate cuts any time soon.

USD/INR paints a positive picture, overbought RSI warrants caution for bulls in the short term

The Indian Rupee trades on a flat note on the day. The constructive outlook of the USD/INR pair remains intact as the price holds above the key 100-day Exponential Moving Average (EMA) on the daily chart. However, the 14-day Relative Strength Index (RSI) reaches overbought territory beyond the 70.00 mark, potentially signaling a temporary weakness or further consolidation in the near term.

The immediate resistance level for USD/INR emerges at 87.62, an all-time high. Sustained trading above this level could pave the way to the 88.00 psychological level.

On the downside, the initial support level for the pair is located in the 87.05-87.00 zone, representing the low of February 5 and the round mark. A breach of the mentioned level could drag USD/INR down to 86.51, the low of February 3.

• USD/CAD may test the lower boundary of the rectangle at 1.4280 level.
• The short-term price momentum is weaker as the pair remains below the nine- and 14-day EMAs.
• A break above EMAs would support the pair to test the rectangle’s upper threshold at 1.4530 level.

The USD/CAD pair remains silent around 1.4310 during the Asian session on Friday. The technical analysis of the daily chart indicates that buyers and sellers are unsure of the long-term direction of the asset as the pair consolidates within a rectangular pattern.

USD/CAD remains below the nine- and 14-day Exponential Moving Averages (EMAs), reinforcing bearish sentiment and suggesting weak short-term price action. This positioning reflects sustained selling interest and hints at further downside risks.

Additionally, the 14-day Relative Strength Index (RSI) consolidates below the 50 mark, signaling continued negative momentum and strengthening the bearish outlook.

On the downside, immediate support is found at a psychological level of 1.4300, followed by the lower threshold of the rectangle at 1.4280 level. A break below this critical support zone could strengthen the bearish bias and put downward pressure on the USD/CAD pair to navigate the region around the psychological level of 1.4200.

The USD/CAD pair could find its initial resistance at the nine-day EMA at 1.4372 level, followed by the 14-day EMA at 1.4381 level. A break above these levels would improve the short-term price momentum and support the pair to test the rectangle’s upper threshold at the 1.4530 level.

USD/CAD: Daily Chart

• GBP/USD remains depressed for the second straight day amid the BoE’s dovish outlook.
• The BoE cut interest rates by 25 bps on Thursday and signaled further rate cuts this year. 
• Subdued USD price action helps limit the downside ahead of the crucial US NFP report.

The GBP/USD pair struggles to capitalize on the overnight bounce from a multi-day low and trades with a mild negative bias, around the 1.2425 area during the Asian session on Friday. This marks the second straight day of a downtick, though it lacks follow-through as traders seem reluctant to place aggressive bets and opt to wait for the release of the US monthly jobs data.

The popularly known Nonfarm Payrolls (NFP) report is expected to show that the world’s largest economy added 170K jobs in December, down from 256K in the previous month. Meanwhile, the Unemployment Rate is expected to hold steady at 4.1%. This, along with Average Weekly Earnings, will play a key role in influencing the near-term US Dollar (USD) price dynamics and provide some meaningful impetus to the GBP/USD pair.

Heading into the key data risk, expectations that the Federal Reserve (Fed) will stick to its easing bias and lower borrowing costs twice by the end of this year keep the US Treasury bond yields depressed near their lowest level since December. This, in turn, fails to assist the USD to attract any meaningful buyers and might act as a tailwind for the GBP/USD pair, though the Bank of England’s (BoE) gloomy outlook should cap the upside.

In fact, the UK central bank lowered its benchmark interest rate by 25 basis points on Thursday and downgraded the growth forecast for 2025. Adding to this, BoE Governor Andrew Bailey told reporters that the central bank expects to make further rate cuts this year. This might continue to undermine the British Pound (GBP) and suggests that the path of least resistance for the GBP/USD pair remains to the downside.