Currency market: GBP/USD vs USD/CAD and USD/JPY

Brian Twomey Brian's Investment

GBP/USD''s main problem is found between the USD/CAD and USD/JPY relationship.

USD/JPY 1.2724.

GBP/USD 1.2629.

USD/CAD 1.2694.

The battle lines are drawn and its the fight in the center between middle currencies. Middle? Reverse exchange rates is best seen to the relationships.

EUR/USD 0.9302.

USD/JPY 0.7861.

USD/CAD 0.7878.

GBP/USD 0.7916.

NZD/USD 0.6540.

2 sets of exchange rates exist and 2 separate trades: middle currencies Vs top and bottom as EUR/USD vs NZD/USD. The current paralysis between GBP/USD, USD/CAD and USD/JPY is enough to stop dramatic movements to EUR/USD and NZD/USD. Most trades are found as middle currencies because of tendencies to create much distance from top and bottom counterparts.

See AUD/USD for example. AUD/USD traveled 100 pips higher from 0.7037 last Wednesday.

Last Wednesday's lineup:

GBP/USD 0.8012.

USD/CAD 0.7813.

USD/JPY 0.7894.

AUD/USD was massively oversold against all counterparts.

Middle currencies are followers. A big EUR/USD move is always followed by GBP/USD in a delayed reaction the next day. Overall we have response Vs reaction. A big GBP/USD move has 2 choices: either correct to meet its middle counterparts or EUR/USD and NZD/USD must respond. Overall normality or harmony must be found and settled between top and bottom Vs the middle.

Response Vs reaction is an interesting case as it relates to music as Call and response. High notes respond to low notes and low notes to high notes. Its the mode of travel to play a vast majority of songs in any genre. Musical notes meet in the middle after the call and response.

Ask the currency brokers why they set up exchange rates with vast distances. GBP/USD at 0.8012 = 1.2481, GBP/USD 0.8011 = 1.2482, GBP/USD 0./8013 = 1.2479. GBP/USD contains a built in differential of 2 pips. This 2 pips is low in relation to GBP/USD by 1 point exchange rates.

GBP/USD as 1 point exchange rates should be viewed as 4 pips to start vs an 8 pip maximum to satisfy day trades.

GBP/USD must first cross above USD/CAD then USD/JPY decides targets and /or where to take profits when satisfied. Ultimately, we want GBP/USD to cross above USD/JPY then GBP/USD is home free to travel massively higher. Or a higher USD/JPY makes GBP longs so much better. USD/JPY at 1.2800's allows GBP/USD more breathing room to bank many more pips.

Author

Brian Twomey

Brian's Investment

Brian Twomey is an independent trader and a prolific writer on trading, having authored over sixty articles in Technical Analysis of Stocks & Commodities and Investopedia.

GBP/USD nudges higher above 1.3350 despite Middle East turmoil

The GBP/USD pair rebounds to near 1.3385 during the Asian trading hours on Thursday. However, the potential upside for the major pair might be limited amid cooler-than-expected UK inflation data and escalating tensions in the Middle East. Traders will take more cues from the UK Retail Sales report, which is due later on Friday.

EUR/USD advances ahead of ECB policy decision

EUR/USD extends its gains for the second consecutive day, trading around 1.1410 during the Asian hours on Thursday. The pair gains ground as the Euro finds solid support ahead of the European Central Bank's upcoming interest rate decision.

Gold holds above $4,100 as weak USD counters Fed hike bets amid US-Iran escalation

Gold holds above the $4,100 mark during the Asian session, and seems to have stalled the previous day's modest pullback from an over two-week high. Crude oil prices climb to a fresh high since June 11 amid a further escalation of tensions between the US and Iran, fueling inflation fears and bolstering US Federal Reserve interest rate hike expectations. This lifts US Treasury bond yields to a multi-month high and is seen as a key factor acting as a headwind for the non-yielding bullion.

Hyperliquid, Robinhood could lead crypto’s next bull market as DeFi and TradFi converge

The next crypto bull market could be driven by the growing convergence between blockchain-based financial infrastructure and traditional finance, according to Bitwise CIO Matt Hougan. In a report published late Tuesday, Hougan argued that crypto may be showing early signs of a market bottom, with Bitcoin gaining 9% since July 1 even as the NASDAQ 100 declined 6%.

Ripple and Stellar await direction amid cautious sentiment

Ripple and Stellar trade cautiously as both tokens hover around key technical levels. XRP is testing resistance at its 50-day EMA, while XLM continues to consolidate around the $0.187 support zone. Meanwhile, mixed derivatives data with a slight bearish tilt suggests traders remain cautious, keeping the next directional move uncertain.

US Dollar mid-year outlook: Exceptional currency, exceptional risks?

The US Dollar enters the second half of 2026 in a markedly different position from a year ago. The King currency has recovered, reflecting persistent US inflation, changing expectations for Fed policy, geopolitical tensions and renewed demand for defensive assets.