Foreign Exchange
January 3, 2023

Top 3 Forex Trends 2023

Mascap Group’s guide to our top 3 Forex Market Trends for 2023

The forex market, valued at $753.2 billion in 2022, has started 2023 at a steady pace, and various currencies like the USD are predicted to gain momentum and strength in the coming year, we present to you our top 3 forex trends for 2023.

GBP/USD trade expected to rise in 2023

As one of the most heavily-traded currency pairs, GBP/USD is poised for continued market activity in 2023. Experts from Morgan Stanley have predicted that the pound Sterling will emerge as one of the strongest currencies in the coming year, leading to increased interest among traders who are taking long positions on GBP/USD.

Although 2022 did not see significant gains for GBP/USD, there are positive indications for the currency pair moving forward. Currently trading at 1.19, GBP/USD is expected to rise and surpass its 37-year low, reaching beyond 1.23 in the coming year. Traders should keep a close eye on this promising opportunity for increased trade and potential profits.

JPY Inflation

By the end of 2022, there was a significant increase in inflation in the Japanese economy, reaching its highest level in 40 years. As a result, the value of the Japanese Yen fell to a 32-year low and remained near its support level for an extended period. However, in 2023, the Yen is expected to experience a bullish turnaround, with the gap between long-term bond yields in the US and Japan decreasing.

This stronger Yen will coincide with the Japanese economy moving away from its ultra-loose monetary policy and transitioning to an ultra-easy monetary policy under new leadership. It is predicted that the Yen will appreciate against the USD, potentially surpassing 110 in value.

The spread for EUR/USD is predicted to be low

Due to its high demand, liquidity, and rational volatility, EUR/USD is predicted to have a low spread in 2023. As one of the most heavily traded currency pairs, and with its listing among the top forex brokerages, 2023 is expected to be a highly favourable year for the pair.

In 2022, the USD surpassed parity with the EUR for the first time in nearly 20 years, continuing its upward trend in the market. This trend is projected to persist, with the exchange rate continuing to rise to 0.96. As a result, the pair is expected to have an extremely tight forex spread in 2023, potentially as low as 0.6 pips.

Trading this pair in 2023 is expected to be significantly less expensive than before, making it a highly profitable asset compared to other pairs.

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