EUR/USD, GBP/USD and EUR/GBP Forecasts – Currencies React to BoE and ECB

EUR/USD Technical Analysis

The US dollar has strengthened slightly in the early hours of Thursday as the Bank of England decision is now in the market, and attention turns to the ECB. The ECB is not expected to change much, so this likely matters more in terms of whether Europeans begin to think about looser policy going forward. The question will be what the market reads in the press conference or statement that causes that interpretation.

Nonetheless, the market is set up for consolidation regardless, with the 1.18 level being significant resistance and the 1.14 level acting as a hard floor. With both central banks remaining relatively easy in terms of monetary policy, this type of behavior makes sense. While the US dollar is favored heading into the beginning of 2026, the reality for now is that this is more or less a sideways market.

GBP/USD Technical Analysis

The British pound did very little after the interest rate decision, with the 25 basis point cut coming in exactly as expected. The real question is where the market goes next. The easiest setup is to watch the highs from Tuesday. If the market can close above those levels, the pound is likely to continue to the upside. If it breaks down below the lows of Wednesday, then the US dollar starts to strengthen, and the market may grind back down toward the 1.30 level. In the meantime, expect a lot of choppiness.

EUR/GBP Technical Analysis

Following the Bank of England interest rate cut, it makes sense that the euro against the pound remains noisy as the market consolidates and attempts to sort out the next move. The 0.8750 level continues to be significant support. As long as the market stays above that area, consolidation remains likely. A breakdown below 0.87 would mark a lower low and confirm, at least technically, that short positions should be considered. This would likely be a grind lower and more of a long-term scenario.

The interest rate differential still favors Great Britain, which works in favor of the pound, although that differential is not as large as it once was. If the market rallies and breaks above 0.88 on a daily close, the next target would be the 0.8860 level. Anything beyond that is likely difficult, as this area has historically been congested and noisy.

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