Forex Major Gain Momentum Ahead of Key Central Banks Decisions

published at 12.03.2025

The Pound Sterling has started the week on a positive note, gaining strength against most major currencies except the antipodeans. This movement comes as investors react to several recent developments in the United Kingdom, including fiscal adjustments, updated economic forecasts, and signals from the Bank of England. At the same time, other major currency pairs such as USD/JPY, AUD/USD, and EUR/USD continue to show notable technical setups that shape broader market sentiment.

 

The British currency continues to build on last week’s recovery after UK Chancellor Rachel Reeves introduced a tax increase worth £26 billion per year. The goal is to reduce the country’s fiscal gap and create a financial buffer for unexpected economic pressures. This fiscal change provided the Pound with some needed relief and improved market confidence.

Adding to the positive tone, the Office for Budget Responsibility raised its growth forecast for 2025 to 1.5%, up from the previous estimate of 1%. This upward revision supported the Pound’s momentum and allowed the currency to extend its rally even as global markets remain cautious.

 

However, the Bank of England’s latest Financial Stability Report introduced a more cautious element. The central bank warned that financial risks have grown over the year, driven by stretched valuations in companies related to artificial intelligence, risky lending practices, and leveraged bets in government bond markets. Governor Andrew Bailey emphasized the need for continued focus on financial stability, saying it is more important now than ever.

Interestingly, despite these warnings, traders still expect the BoE to cut interest rates at its December 18 meeting. Weakening labor market data and moderate inflation growth are supporting those expectations. The unemployment rate reached 5% in the three months to September — the highest level in four years — while October’s inflation report showed only a mild increase in price pressures.

 

While the Pound holds firm, other major pairs also offer important signals.

• USD/JPY is trading quietly near 155.70 as markets wait for the Bank of Japan’s anticipated December rate hike. Analysts note a softening USD and mild bearish momentum in the pair, with key support levels at 155.40 and deeper support toward 154.40.

• AUD/USD rebounded from the August low at 0.6410 and moved above its 200-day moving average, hinting at short-term bullish potential. A break above 0.6600 could open the door for moves toward 0.6685–0.6710.

• EUR/USD has regained its bullish stance, trading above 1.1640. Sticky Eurozone inflation, improving sentiment, and expectations of faster Fed rate cuts are helping the Euro. Technical indicators show continued upside potential toward resistance at 1.1660–1.1670 and possibly the 1.1730 area.

 

Overall, the Pound is benefiting from fiscal support and improved growth expectations, even as the Bank of England warns about rising financial risks. At the same time, anticipation of central bank decisions — particularly from the BoE, BoJ, and Fed — continues to shape currency trends across the board. For investors, the current environment presents opportunities in pairs showing strong technical setups. Traders looking at GBP-related positions may consider buying on dips while keeping a close eye on labor market data and BoE commentary. Meanwhile, EUR/USD and AUD/USD offer attractive bullish scenarios, and USD/JPY could provide opportunities if support levels break.

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