Weekly FX Technical Analysis - 5th May 2026

FX markets are beginning to show signs of hesitation at key technical levels.

GBP/USD continues to struggle below 1.36, EUR/USD has once again failed near 1.19, and USD/JPY has pulled back from the critical 160 level — highlighting a broader lack of conviction across major pairs.

With central bank uncertainty, political developments, and shifting risk sentiment all in play, the coming weeks could prove decisive for direction.

GBP/USD

GBP/USD is trading around 1.3540, continuing to consolidate beneath the 1.3600–1.3650 resistance zone. The recent recovery from April lows remains intact, but upside momentum is stalling as price struggles to break through this key supply area.

Potential Scenarios

• Bullish: A sustained break above 1.3650 opens a move toward 1.3800.

• Bearish: Rejection here exposes 1.3400, with a deeper move toward 1.3200 if momentum fades.

Macro Backdrop to Consider

Sterling has been supported by relatively resilient UK data and expectations that the BoE will remain cautious on rate cuts. However, political pressure on the UK government and fiscal concerns continue to linger in the background. In contrast, USD direction remains driven by uncertainty around Fed policy timing and ongoing political influence over central bank leadership expectations, keeping volatility elevated.

House View

Neutral-to-bullish, but preference remains to hedge USD exposure on rallies into 1.3600+ until a confirmed breakout occurs.

GBP/USD: MAY ‘25 - PRESENT

EUR/GBP

EUR/GBP is trading near 0.8630, drifting lower toward the bottom of its multi-month range. Price action continues to respect the broader 0.8600–0.8750 structure, with downside pressure building in recent sessions.

Potential Scenarios

• Bullish: Recovery above 0.8700–0.8750 reopens 0.8850.

• Bearish: Break below 0.8600 exposes 0.8550 and potentially lower.

Macro Backdrop to Consider

The cross continues to reflect relative stagnation between the UK and Eurozone outlooks. While Eurozone growth remains subdued, recent stabilisation in UK data has tilted short-term bias slightly in favour of GBP. Political noise in the UK and weak industrial momentum in Europe continue to offset each other, maintaining range dynamics.

House View

Range with downside bias, favouring GBP strength while below 0.8750.

EUR/GBP: MAY ‘25 - PRESENT

EUR/USD

EUR/USD is trading around 1.1690, easing back after another failure to sustain gains above the 1.1800–1.1900 resistance zone. The broader uptrend remains intact, but repeated rejections highlight a lack of conviction at higher levels.

Potential Scenarios

• Bullish: Break above 1.1900 opens 1.2000.

• Bearish: Loss of 1.1650 support risks a move toward 1.1500.

  
  

Macro Backdrop to Consider

USD sentiment continues to hinge on Fed policy uncertainty and political influence over future rate direction. Meanwhile, Eurozone growth remains fragile, with inflation stabilising but not strong enough to support a sustained hawkish ECB stance. Energy markets and geopolitical developments remain key external drivers for EUR sentiment.

House View

Mildly constructive, but preference is to buy dips rather than chase strength near resistance.

EUR/USD: MAY ‘25 - PRESENT

USD/JPY

USD/JPY is trading around 157.20, pulling back from recent highs near 160.00 after failing to sustain a breakout. The broader uptrend remains intact, but near-term momentum has softened.

Potential Scenarios

• Bullish: Recovery back above 158.50–160.00 reopens 162.00.

• Bearish: Break below 156.00 exposes 154.50 and deeper correction risk.

Macro Backdrop to Consider

The pair continues to be driven by yield differentials, though recent pullback suggests markets are becoming more cautious around intervention risk from Japanese authorities. At the same time, any shift in Fed expectations or global risk sentiment could accelerate downside moves, particularly if safe-haven demand for JPY increases.

House View

Cautiously bullish, but avoiding chasing USD strength given heightened intervention risk and signs of consolidation.

USD/JPY: MAY ‘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.

info@k2-fx.com

+44 203 355 4603

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.