British Pound Sterling Outlook vs US dollar, Euro, and Australian dollar: Short-term momentum against GBP, longer-term more favourable

Modified: Friday, 11 October 2013 10:06 BST

The British pound sterling (Currency:GBP) is looking a great deal firmer on Friday morning after a week of declines.

A look at the exchange rate markets shows:

The pound to euro exchange rate is 0.19 pct down at 1.1789.
The pound to US dollar exchange rate is 0.1 pct higher at 1.5984.
The pound to Australian dollar exchange rate is 0.08 pct lower at 1.7037.

Please note: The above are inter-bank wholesale rates. Your bank will affix a discretionary spread when passing on their retail rate. However, an independent FX provider will guarantee to undercut your banks offer, thus delivering more currency. Please learn more here.

Outlook for the British pound sterling vs dollar, euro and Australian dollar

Starting with the euro vs pound (EUR/GBP) we note the short-term setup (2 to 6 weeks) is overwhelmingly biased towards the EUR bulls.

We see 9 bullish technical events outweighing just one bearish technical event giving us a clear indication of where near-term momentum lies.

The intermediate-term charts (6 weeks to 9 months) do however remind us that the wider picture still favours the British pound.

In this timeframe we see 5 bearish events and 2 bullish events; the implication being that the current euro strength we are witnessing could in fact be a healthy corrective move ahead of further declines.

Analysts at Recognia Inc suggest that those opting to buy the euro to pound pair should consider a stop loss at 0.8404. Those shorting the pair should consider protection at 0.8550.

Regarding the pound dollar exchange rate we see the short term setup is decidedly bearish, and trading in this short-term timeframe will certainly favour the US dollar.

There are 8 bearish events outweighing an essentially negligible lone bullish event, formed back on the 13th of September.

The intermediate-term picture, just as was the case for EUR/GBP, suggests that the outlook still ultimately favours the pound sterling.

We see 4 bullish technical indicators dominating one bearish indicator in this timeframe. Those looking to trade should consider a stop loss at 1.5708 for long positions. Recognia Inc. suggest that those going short consider 1.6212.

Looking at the pound to Australian dollar exchange rate we should not be surprise to note that momentum is again not in favour of the UK currency.

We see 7 bearish events dominating 2 bullish events on the Australian dollar outlook analysis.

The intermediate term is, unlike GBP/USD and EUR/GBP, not in favour of the British pound either.

A top has been formed at 1.75 and has been in place since August; cracking this resistance is highly unlikely for some time but would be required to justify a return to the year's rally.

Recognia Inc. suggest that those taking long trading positions consider a stop loss at 1.6629, and those going short should consider a stop at 1.7234.