GBP/USD, EUR/USD Forecast: Two trades to watch

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GBP/USD rises as the UK GDP beats forecasts

GBP/USD is edging higher, holding above 1.3550 and moving towards 1.3600, supported by US dollar weakness and stronger-than-expected UK GDP data.

The UK economy expanded by 0.5% month-on-month in February, well above the 0.1% forecast and up from an upwardly revised 0.1% in January. The data suggests the economy had solid momentum heading into the Iran conflict. The dominant services sector drove growth, marking a fourth consecutive monthly expansion, while production and construction also contributed positively.

However, further upside in sterling may be limited as the outlook has deteriorated since the onset of the Iran war. Rising energy prices and the UK’s reliance on imported energy pose downside risks. The International Monetary Fund has already downgraded UK growth to 0.8% for this year from 1.3%.

Despite potential stagflationary pressures, Andrew Bailey has indicated that the Bank of England will not rush to raise interest rates, stressing that the duration of the conflict will be a key determinant. Should the war de-escalate and oil prices stabilise, inflationary pressures may prove transitory, reducing the need for aggressive policy tightening.

Meanwhile, the US dollar remains under pressure, trading near a six-week low amid optimism over potential peace in the Middle East. President Trump has suggested that the conflict could end soon, with diplomatic efforts— including talks involving Israel and Lebanon—supporting risk sentiment.

Additionally, expectations that the Federal Reserve will keep interest rates unchanged are weighing on the dollar. US initial jobless claims are expected to edge higher to around 215,000, and attention will remain firmly on geopolitical developments.

GBP/USD forecast – technical analysis

GBP/USD found support at the 1.3150 support zone and recovered higher, rising above the falling channel and above the 200 SMA to resistance at 1.36. This, combined with the RSI above 50, keeps buyers optimistic of further upside.

A rise above 1.36 opens the door to further gains towards 1.37 before bringing 1.3870, the 2026 high, into focus.

Support is seen at 1.3420, the 200 SMA and below here at 1.3340, the January low comes into play.

EUR/USD rises on USD weakness & ahead of ECB minutes

EUR/USD is holding above 1.1800 and extending gains, supported by broad US dollar weakness amid improving risk sentiment and growing optimism over a potential de-escalation in the Middle East.

The dollar has come under pressure after President Trump confirmed indirect negotiations with Iran, raising expectations that peace talks could resume in the coming days. He also suggested that Israel and Lebanon may begin direct talks soon, potentially paving the way for a more durable ceasefire.

Further weighing on the greenback, Trump has renewed his criticism of Federal Reserve Chair Jerome Powell, fuelling concerns over central bank independence.

The euro is also benefiting from improved market sentiment, with European equities moving higher and US stocks hovering near record highs, reducing demand for the safe-haven US dollar.

Attention now turns to eurozone inflation data, expected to confirm that CPI rose to 2.5% year-on-year in March. This comes ahead of the latest European Central Bank meeting minutes from March 19, where policymakers left rates unchanged but highlighted rising risks to both growth and inflation, particularly from elevated energy prices linked to the Iran conflict.

More recently, ECB officials have signalled that inflation expectations could rise faster than anticipated, strengthening the case for potential rate hikes in the coming meetings. However, policymakers continue to stress that there is no urgency to tighten policy, maintaining a cautious and data-dependent approach.

Looking ahead, developments in US–Iran relations will remain a key driver for EUR/USD, alongside incoming eurozone inflation data and ECB communication.

EUR/USD forecast - technical analysis

EUR/USD has recovered from the 1.1410 2026 low, rising above the 200 SMA and re-entering the rising channel. The price has run into resistance at 1.1825, the March high.

Buyers will look to rise above 1.1825 to extend gains to 1.1925, the February high. Above ere 1.20 comes into focus.

Support is seen at 1.1670, the 200 SMA. A break below here brings 1.16 into focus.