Pound sterling at attractive selling levels vs the US dollar, further declines predicted

• The pound to US dollar exchange rate is quoted as being 0.6 pct in the red on a day to day basis at 1.6062 in mid-afternoon in London.
• The depreciation in the value of the pound against the dollar is eye-opening, it was just 3 days ago that a high of 1.6260 was attained.

(Are you looking at transferring pounds into dollars? Would you like to lock-in these levels ahead of further declines? You should consider taking out a forward contract. Get in touch with a dedicated currency specialist, more here.)

GBP at attractive selling levels, at top of 4-year trend line

Leander Dreyer at Jyske Bank is always a provider of great insights and helps provide a clear understanding as to why the British pound is falling:

"The current level is testing the upper trend line of the four-year trend. If we look at the short-term trend (see the chart), then the level at 161.50 is decisive for a movement down towards 160. Seen in the big perspective, we assess that GBPUSD has reached a long-term attractive sales level."

Signals for pound dollar rates shift rapidly from Buy to Sell

Camilla Sutton at Scotiabank comments on the about-turn in fortunes for the UK currency vs US dollar and is predicting further declines:
"GBP is weak, down 0.6%, on limited news flow but some model and technical selling. Next week’s focus will be the BoE meeting (October 10th), but with no change expected to either the bank rate (0.5%), asset purchase target (£375bn) or forward guidance it is unlikely to dramatically shift the direction of GBP.

"Technicals for GBP have shifted rapidly from buy to sell with the MACD entering a sell signal today and spot having broken below several layers of support. The bears have clearly regained control. Support lies at last Friday’s open of 1.6041 followed by last week’s low of 1.5956; while resistance is at its recent high of 1.6260."

US dollar due to pick up ground against rest of G10

GBP/USD aside, this week has been broadly USD negative. What does the outlook hold?

Shaun Osborne at TD Securities says:

"Markets have been confined to narrow  ranges over the past week; the uncertainty driven by the situation in Washington has weighed broadly on the USD and risk sentiment—though softer than expected ADP and ISM data have not helped.  

"As we pointed out at the start of the week, risk aversion is no longer the USD’s friend—given the modest inverse correlation we see between volatility and the USD these days.  

"Investors will be keeping close tabs on the headline flow again today in the absence of any economic data—if it appears that Congress is moving towards a deal on spending and the debt ceiling as reports indicate (note that President Obama has cancelled a trip to Asia due to the present situation at home), look for the USD to pick up a little ground."