Weekly FX Technical Analysis - 17th August 2026

This week’s FX charts show a market still being pulled between technical recovery and macro uncertainty. GBP/USD has extended its rebound and is now testing the important 1.3560 resistance area, while EUR/GBP remains fragile below former support despite a modest recovery from the lows. EUR/USD has improved sharply and is now pressing into the key 1.1600 region, helped by a softer dollar as Fed hike expectations fade. USD/JPY remains the most politically sensitive chart, with recent US Japan yen intervention still fresh in the market and 160.00 to 161.00 now the major resistance zone to watch.

GBP/USD

GBP/USD has continued to recover strongly from the late July support zone and is now trading around 1.3550. The pair has moved back above its short term moving average and is testing an important resistance area around 1.3560. RSI has improved into constructive territory, suggesting momentum has turned more positive, although the pair still needs a clean break above this zone to confirm a broader continuation higher.

Potential Scenarios

• Bullish: If GBP/USD can break and hold above 1.3560, the next upside targets sit around 1.3650 and then 1.3800. A move through those levels would suggest the recovery has developed into a stronger medium term move.

• Bearish: If the pair fails around 1.3560, price could rotate back towards 1.3430 and then 1.3270. A break below this area would weaken the recent recovery and bring the 1.3150 to 1.3200 support zone back into focus.

Macro Backdrop to Consider

Sterling has been supported by a weaker dollar and stronger UK data, with markets now watching UK inflation and labour figures closely for the next Bank of England signal. The pound’s rally still looks vulnerable to any soft UK data surprise, while Middle East energy risk could complicate the inflation outlook and keep the BoE cautious.

House View

Our house view is cautiously constructive while GBP/USD holds above 1.3430. However, the next stage of the move depends on whether the pair can break through 1.3560 and avoid another rejection at resistance.

GBP/USD: AUGUST ‘25 - PRESENT

EUR/GBP

EUR/GBP remains in a fragile position after its sharp decline through the previous 0.8600 to 0.8625 support area. The pair has bounced from the lower 0.8400s, but price is still trading below former support and below the broader descending resistance line. RSI has recovered back towards neutral territory, which suggests the immediate selling pressure has eased, but the wider structure still looks heavy.

Potential Scenarios

• Bullish: If EUR/GBP can reclaim 0.8585 and then 0.8625, the recent recovery could extend towards 0.8650 and 0.8700. A move through these levels would suggest the downside break has started to lose force.

• Bearish: If the pair fails below 0.8585, sellers may look to retest 0.8520 and then 0.8475. A break below 0.8475 would put the recent lows back under pressure and could reopen the downside trend.

  
  

Macro Backdrop to Consider

The euro remains exposed to the inflation impact of renewed Middle East and Strait of Hormuz tensions, especially as energy prices feed directly into the ECB outlook. For sterling, stronger UK data and expectations of a more cautious BoE have helped the pound outperform, but that could reverse quickly if UK inflation or labour data disappoints.

House View

Our house view is neutral to mildly bearish while EUR/GBP remains below 0.8585 to 0.8625. The bounce looks corrective for now, and the pair needs to reclaim former support before the outlook becomes more balanced.

EUR/GBP: AUGUST ‘25 - PRESENT

EUR/USD

EUR/USD has continued its recovery and is now testing the 1.1600 area. The move from the 1.1330 to 1.1350 support zone has been sharp, with price now above the short term moving average and RSI in strong neutral territory. The chart has improved materially, but the pair is now approaching a key resistance cluster, meaning the next close above or below 1.1600 will be important.

Potential Scenarios

• Bullish: If EUR/USD can break above 1.1600 and hold that level, the next upside targets sit around 1.1640, 1.1700 and then 1.1800. A move through 1.1800 would suggest the euro has regained broader upside momentum.

• Bearish: If the pair fails around 1.1600, price could pull back towards 1.1500 and then 1.1460. A break below 1.1460 would weaken the recovery and bring 1.1350 back into focus.

  
  

Macro Backdrop to Consider

The dollar has softened as markets reduce expectations of a September Fed hike following weaker US retail sales, softer inflation signals and weaker labour market momentum. This has supported EUR/USD, although the euro still faces risks from energy prices, Middle East disruption and an ECB that may need to balance inflation concerns against weaker growth.

House View

Our house view is cautiously constructive while EUR/USD holds above 1.1500, but a clean break above 1.1600 is needed to confirm the recovery. Without that break, the pair remains vulnerable to another rotation lower.

EUR/USD: AUGUST ‘25 - PRESENT

USD/JPY

USD/JPY remains volatile after the sharp fall from the 163.00 to 164.00 region. The pair has rebounded from the 156.00 area and is now trading around 159.25, but it remains below the key 160.00 to 161.00 resistance zone. RSI has recovered from oversold territory but remains relatively weak, suggesting the pair has stabilised rather than fully repaired the earlier breakdown.

Potential Scenarios

• Bullish: If USD/JPY can reclaim 160.00 and then 161.00, the pair could attempt another move towards 162.00 and 164.00. A move above that area would suggest the broader uptrend is trying to reassert itself.

• Bearish: If the pair fails below 160.00, downside pressure could return towards 157.00 and then 156.00. A break below 156.00 would suggest a deeper correction, with 155.00 and 152.50 becoming relevant.

Macro Backdrop to Consider

USD/JPY remains highly sensitive to intervention risk after recent coordinated US Japan action to support the yen. The rate differential still favours dollar strength, but weaker US data, reduced Fed hike expectations and the possibility of faster Bank of Japan tightening have made the pair much more vulnerable above 160.00.

House View

Our house view is neutral to cautiously bearish while USD/JPY remains below 160.00 to 161.00. The wider trend has not fully broken, but the pair now carries clear intervention and positioning risk on moves back towards 162.00 and above.

USD/JPY: AUGUST ‘25 - PRESENT

As always, if you’d like to discuss these moves in more detail, or how they could impact your business or personal requirements, please don’t hesitate to get in touch.

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Disclaimer: The information in this publication is provided for general information purposes only. It does not constitute financial or investment advice, nor should it be relied upon as such. Readers should consider their own circumstances and seek independent advice where appropriate.