Exchange Rate Forecasts: A Pound Roadblock, Dollar Neutral, Euro Bears, JPY Weaker, Australian Dollar Weaker

By Rob Samson

Pound Sterling Live compiles and presents the latest short and medium term exchange rate forecasts on the key currency pairs we follow.

Global foreign exchange rate markets stabilised slightly on Monday with the JPY easing back while the GBP and the AUD managed to recoup most of their losses chalked up during the Friday session.

The outlook remains volatile though but we should see the likes of the British pound maintain a positive tone, particularly after fresh GDP data today confirmed the UK economy is witnessing solid growth.

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Pound dollar exchange rate forecast

"A slew of numbers including 4Q GDP numbers are due today with some degree of optimism already being attached to the imminent data release. Multi-session, a first road block on the top side is expected into 1.6670 while 1.6430 may hold if investor confidence towards the pound is not derailed." - OCBC Bank.

"The relative weakness in the dollar has ensured that the UK currency has remained firmly lodged at the upper end of its recent range and, crucially, within striking distance of resistance in the form of the 2011 highs, at 1.664 or so. A break higher looks possible but, possibly, not at the first time of asking." - Charles Stanley.

"As bullish conditions persist, there’s further upside potential to resistance at 1.6747. A break above which would open the way to 1.7043. Support is at 1.6447 ahead of 1.6310." - UBS.

Pound euro exchange rate forecast

"The pound ended the week marginally lower, despite the fact that economic data points to an earlier-than-expected rise in interest rates. The chart shows that it retreated from resistance in the form of its long-term downtrend and this price action makes it clear that it is likely to spend more time consolidating its recent gains before it is ready to make another push higher." - Charles Stanley.

On EUR/GBP, UBS say: "The important resistance is at 0.8349. While this holds, the cross remains vulnerable to extend its bearish trend to test support at 0.8160. A close below which would be the next bearish development."

Euro dollar exchange rate forecast

Scotiabank say:

"EUR is weak, down 0.2% since yesterday’s close and flirting with a break below its 50‐day MA of 1.3648. We are EUR bears, not believing that it will remain a strong currency backed by weak fundamentals.

"We found weekend comments by President Draghi, that the ECB would consider buying private sector loans a clear sign that central bank policy in Europe will prove more accommodative for longer than either the BoE or the Fed. This is likely to prove a significant weight against EUR in the second half of this year.

"Today, fundamental data releases were not the focus, with the core release a softer than expected German import prices, flat m/m and –2.3% y/y."

"The EUR-USD held steady to lower on Monday after blipping higher temporarily on a better than expected German Jan Ifo data. Intra-day, we remain largely neutral with the pair expected to ply a 1.3635 – 1.3710 range pending further news flow." - OCBC Bank.

"Last week’s slide in the US currency helped the euro to recover somewhat from its recent weak spell and to push back up through the uptrend which it breached a couple of weeks ago. The chart shows that volatility has begun to rise and this is likely to increase further in the coming weeks as investors attempt to get a handle on what is going on in emerging markets (and how they will impact on more developed markets). For now, further short-term upside looks possible for the single currency and a run up to around 1.38 is relatively likely." - Charles Stanley.

"Despite the recent sharp recovery, the MACD is still below its zero line which is a bearish condition. Only a close above resistance at 1.3746 would extend the strength. Support is at 1.3623 ahead of 1.3508." - UBS.

Australian dollar to US dollar exchange rate forecast

"Early this morning, the Nov 13 Conference Board leading indicator for Australia continued to weaken with a 0.2% gain from 0.5% in the previous month. Like the JPY, the AUD may also remain a function of any potential EM jitters or negative news flow emanating out of China (especially with respect to the shadow banking front). Our view remains largely unchanged and we expect potential heaviness to persist in the near term within a 0.8660-0.8825 range." - OCBC Bank.

"The current recovery will be limited to resistance at 0.8888. As the pair maintains bearish trend, there’s risk for a break through support at 0.8545 and then extend to critical 0.8067." - UBS.

Dollar Yen exchange rate forecast

"Firmer UST yields aided a recovery in the USD-JPY on Monday and any potential swings in global risk appetite levels are expected to continue to have a bearing on the pair as well as the JPY-crosses. Initial
resistance is expected going into the 55-day MA (103.14) while the 102.00 floor may hold in the interim." - OCBC Bank.

"The pair has been consolidating over the past few weeks, with support at 101.63 ahead of 99.96. Resistance is at 103.30 ahead of 104.84." - UBS.