Sterling enters the week on firm ground, holding near $1.37 — its strongest level since September 2021. With the Bank of England’s Monetary Policy Committee (MPC) announcement due on 5 February 2026, all eyes are on how inflation and wage signals may shift future UK interest rate decisions.
In the U.S the Federal Reserve left the federal funds target range at 3.5%–3.75% in its 28 January 2026 meeting. The Fed’s ongoing “higher-for-longer, data-led” strategy remains central to any short-term USD forecast, shaping both EUR/USD and GBP/USD risk dynamics.
Will Dollar Rate Increase Next Week?
Potentially, yes — depending on the data.
The dollar enters the week in a holding pattern, but U.S. inflation and payroll reports due over the coming days could swing sentiment. The Fed reiterated that further moves are contingent on incoming data. That means any inflation or jobs surprise could cause a fast, asymmetric move in the USD.
Key factors to watch:
- Fed’s tone on inflation persistence
- January’s nonfarm payrolls and CPI data
- Positioning ahead of potential March or May policy shifts
For individuals or businesses converting GBP to USD, this could be a prime window to lock in forwards or set strategic limit orders in the 1.35–1.36 support zone.
GBP/USD Forecast – Weekly Technicals and Trade Strategy
Indicative level (2 Feb 2026): 1.368
1-week change: +0.23%
Weekly high/low: 1.3817 / 1.3644
Technical indicators:
- 5-day SMA: ~1.376
- 20-day SMA: ~1.353
- RSI(14): ~66 (cooling from late-January highs above 80)
Interpretation: GBP/USD remains in an upward channel, though momentum has eased. This often signals a sideways consolidation or shallow pullback — not a trend reversal.
Support and resistance:
- Resistance: 1.382–1.387 (recent highs)
- Support: 1.365 short-term, then 1.353 (20-day SMA)
Practical strategy:
- Buying USD: Consider a split structure with a partial forward and a limit order near 1.35–1.36 for opportunistic improvement.
- Selling USD: Place a target order near 1.38–1.39, with a contingency if the dollar strengthens further mid-week.
EUR/USD Weekly Prediction – Macro and Market Positioning
Current reference level: 1.184
Weekly move: +0.03%
Range: 1.1836 to 1.1974
Drivers this week:
- Eurozone Q4 growth printed at +0.3% quarter-on-quarter
- December inflation: 1.9%
- Unemployment: steady at 6.2%
Despite this stable macro picture, EUR/USD remains largely driven by U.S. data releases and rate differentials. Expect euro strength only if U.S. data surprises to the downside or if ECB commentary signals a less dovish bias.
For clients planning USD → EUR conversions, the week may offer tactical opportunities near current levels if U.S. data weakens sentiment.
GBP/EUR Forecast – Currency Forecast for GBP and Euro
Current level: ~1.155
Weekly change: +0.20%
Technical indicators:
- 5-day SMA: ~1.153
- 20-day SMA: ~1.152
- RSI(14): ~50 (neutral)
Outlook: The pair is testing recent highs, with no major momentum signals. GBP support has come from the January UK manufacturing PMI (51.8), which hit its highest since August 2024. However, any dovish surprise from the Bank of England could cap gains.
Support and resistance:
- Resistance: 1.155–1.160
- Support: 1.151, then 1.145
Hedging strategies:
- Buying euros: Consider locking part of your requirement via forward contract ahead of the BoE decision.
- Selling euros: Current levels near range highs support use of target orders to benefit from any GBP extension.
GBP/AUD and GBP/CAD – Weekly Outlook
GBP/AUD
- Spot: ~1.968
- Weekly change: −0.34%
- Week range: 1.9551–1.9771
GBP/CAD
- Spot: ~1.866
- Weekly change: −0.25%
- Week range: 1.8610–1.8791
Drivers: Both crosses reflect mild GBP pullback. In Canada, the Bank of Canada held rates at 2.25%, citing uncertainty — especially from U.S. trade dynamics.
Strategy:
- If you’re buying AUD or CAD, consider layered execution given the mild softness.
- For income or asset sales in CAD/AUD, these levels still support structured repatriation planning.
GBP/JPY Outlook – High Volatility Play
Spot level: ~212.05
Weekly change: +0.78%
What’s moving the yen:
- Bank of Japan held at 0.75%, but internal debate is rising over whether they’re falling behind the curve.
- Market commentary suggests that yen volatility may rise sharply if BoJ shifts tone in upcoming months.
Planning implication:
- For UK corporates or importers with JPY exposure, a forward + limit order combination remains more resilient than a single large conversion.
GBP/CHF – Stability Returns
Spot level: ~1.0625
Weekly change: −0.06%
Observations:
- CHF remains a low-volatility counterparty this week.
- With realised vol around 5.13% (annualised) — compared to ~7.7% for GBP/USD — this pair can be tactically used to balance risk.
Event Risk: What to Watch This Week
The central focus is the Bank of England’s MPC decision on 5 February 2026. Market consensus expects a hold at 3.75%, but investor sentiment will hinge on the tone around inflation and wage growth.
Action plan for clients:
- For GBP/USD exposure, consider protection before Thursday’s event. Use target levels + contingency triggersrather than waiting for a single spot conversion.
- For GBP/EUR, current levels are near the range top. Consider layering forward hedges or using target ordersbefore Thursday.
