Exchange Rate Predictions for British Pound, US Dollar, Euro and Australian Dolla

The long-term trend remains down for the Euro and up for the US Dollar complex, however the one to watch at the moment is sterling which has had a roller-coaster of a ride through the course of mid-August.

For reference, the following FX levels are seen at the time of writing (Thurs 21/08):

  • The pound to euro exchange rate: 0.12 pct higher on a day-on-day comparison at 1.2502.
  • The pound to dollar exchange rate: 0.02 pct lower at 1.6591.
  • The euro to dollar exchange rate: 0.11 pct higher at 1.3274.
  • The Australian to US dollar rate: 0.11 pct lower at 0.9278.

Be Aware: The above quotes are taken from the wholesale markets, your bank will affix a spread at their discretion. However, an independent FX provider will seek to undercut your bank's offer thereby delivering up to 5% more FX in some circumstances. Please learn more.

Pound to Dollar (GBP/USD) Predictions: 1.6650 is Key Support

Concerning the forecast for the pound dollar rate (GBP/USD) Stephen Gallo at BMO Capital tells us:

"Sterling a little stronger this morning with Cable back above 1.6700, and EURGBP opening lower in Asia on a combination of the events in Ukraine, and Mr Carney’s comments in yesterday’s Sunday Times.

"More clarity as usual from the BOE Governor, who was reported as saying that just the expectation of wages growth, may be enough to provoke a rate rise, pretty much a contradiction of his comments during the MPR last week. We still favour EURGBP to trade lower on a medium term basis, and only a break above 0.8050 would be of concern. 1.6650 looks like very important short term support in cable for now."

Euro to Dollar (EUR/USD) Prediction: Downside Resolution Ahead

There has been little by way of excitement offered by the world's most traded currency pairings as of late.

However, we must keep an eye on the longer-term trends at play.

According to Lucy Lillicrap at forex brokerage AFEX oversold daily readings and the presence of good support around 1.3325 is limiting Euro weakness thus far in August.

Looking ahead though Lillicrap says:

"A downside resolution remains readable over coming weeks with potential implied toward 1.3150 thereafter, and 1.3000/1.2750 as well, before substantial demand emerges again."

AFEX note that this latter level holds the key to 1.2000 and will probably thus be defended at least initially.

"However for the time being some additional reactive or at least consolidative action would not seem untoward and while recovery scope is restricted by the presence of major resistance at 1.3700 effective local selling pressure appears thin until 1.3500 or so again," says Lillicrap.

AFEX are targetng a move lower in the euro dollar exchange rate to 1.2000 .

Pound to euro exchange rate (GBP/EUR) prediction: Short-Term Weakness?

We are witnessing a strong comeback in the sterling euro rate following on from weekend comments uttered by the Bank of England's Carney.

However, we will need to see a couple of daily closes higher before reinstating the short-term pro-GBP stance.

"Much of the implied upside potential for GBP/EUR is likely to come via a weakening EUR/USD and while USD/JPY continues to re-consolidate following extended advances during 2012/13 a long term recovery sequence should ultimately keep GBP/JPY supported as well," says Lillicrap.

So far as GBP/EUR concerned, albeit allowing for another week or so of corrective activity, focus is then expected to switch back to recent 1.2700 area cycle peaks with intervening erosion limited to 1.2325 or so beforehand.

"Only a break below key 1.2250 support would damage the positive outlook and otherwise long range indicators are suggesting an eventual return to the 2012 high at 1.2900," says the AFEX analyst.

Australian Dollar to US Dollar: Uncertainty to weigh on AUD

"With uncertainty still surrounding the Australian economy, we expect to continue seeing added volatility across Australian dollar markets in the near term," says Kamil Amin at Caxton FX.

Commenting on the technical outlook, Luc Luyet at Swissquote Bank says:

"AUD/USD has experiencied some buying interest close to the key support at 0.9206, favouring further medium-term sideways moves. A resistance stands at 0.9374. An hourly support now lies at 0.9288 (14/08/2014 low).

"In the longer term, prices are consolidating within the range defined by the key support at 0.9206 (see also the 200 day moving average) and the key resistance at 0.9461 (10/04/2014 high)/0.9505."