Currency Forecasts: Euro to Pound Exchange Rate Under Pressure AND Euro Dollar Rate Also Expected to Decline Further

A near-term retracement higher against the GBP was a feature of this week's currency trade, however continued geo-poltical concerns in Eastern Europe appear to be playing in a euro-negative fashion.

Interestingly though, one analyst says the break-down in the euro is something of a mystery for the time being. More on this below.

Euro rate today, key levels at time of writing:

• Euro dollar exchange rate (EUR/USD): 0.06 pct higher on a day-to-day basis at 1.3472.
• Euro pound exchange rate (EUR/GBP): 0.11 pct higher at 0.7909.
• Euro to Aus dollar exchange rate (EUR/AUD): 0.19 pct higher at 1.4269.
• Euro to NZ dollar rate (EUR/NZD): 1.41 pct higher at 1.5699.

(Note: If you are hoping for a better exchange rate then don't hesitate, ensure your currency provider has the relevant stop-losses or buy orders in place. An independent FX provider could also execute your transaction at rates that can be up to 5% more beneficial than the rates offered by your bank.)

Euro dollar rate forecast: EUR/USD Could Fall to 1.3300

Although support at 1.3475 continues to hold, attempts to move higher also appear untenable and a downside move from the longstanding ranging pattern remains the favoured outcome going forward.

According to currency forecast note issued by AFEX at the start of the new week the following levels are in play:

"For now this range (which technically extends back up to 1.4000) is still intact and further sideways action cannot be ruled out. However, unless the current ranging pattern begins to look much more obviously base-building, no major base should form and a close beneath 1.3475 is expected to signal completion of an intermediate distributive period instead. Once seen, enough top-forming action is in place to allow an extension to 1.3300 initially with studies suggesting the market will then “stair-case” its way down to 1.3000 if not lower over coming quarters."

Adding to the conversation, analysts at IFX tell us:

"The next level to watch is 1.3479, which is the February low with resistance above at 1.3539. Following Thursday afternoons plane crash and a day earlier the U.S. and the European Union announcing a fresh round of sanctions against Russia, following the annexation of Crimea in April and ongoing tensions in the rest of Ukraine. The U.S. package was the largest round of penalties so far."

Potential for further advances in the euro pound (EUR/GBP) rate

The euro to pound rate is currently seen in a longer-term downtrend, however there do exist opportunities for the pair to correct higher:

"Some near-term retracing activity for Sterling –both versus the U.S. Dollar and also major European currencies would not be unseemly especially as prior trends appear to have peaked in many instances.

"However given the improved macro Sterling outlook, emergent weakness will probably be short-lived.

"On this basis and using GBPEUR as an example, even if prices fail to immediately vault the notable (mid-2012) cyclical high at 1.2900, an eventual break of this prior peak remains readable. Elsewhere GBPJPY and GBPCHF have both reached but not yet established themselves beyond obvious resistance levels –at 175.00 and 1.5500 respectively- but again dips as and when seen are seen more as a response to recent strength rather than any attempt to top out in a meaningful manner."