Dollar / Pound Sterling / EUR Exchange Rate Forecasts as we Move Into February 2014

By Will Peters

A selection of forecasts for the US dollar and Pound Sterling exchange rate pairings gathered by the team at Pound Sterling Live.

A look at the markets on Friday the 31st of January shows the US dollar continues to attract a fair bid while the pound sterling remains stubborn to any external pressures. However, forecasters warn this could yet change.

The euro is however the currency that is witnessing pressure, and this could be extended further warn forecasters.

Pound to US dollar exchange rate forecast

Craig Erlam at Alpari UK:

"Sterling is closing in on a key level of support, having been in a short term bearish trend over the last week. So far, this just looks like a textbook retracement and as a result, I still think the pair will continue to push higher in the coming weeks. Confirmation of this should come if the pair fails to break below 1.6435, where the 200-period SMA on the 4-hour chart intersects the 61.8 fib level. Also around this level is the ascending trend line, which dates back to 2 August, making this a significant level of support for the pair.

"A failure to close below here should prompt a move back towards last weeks highs, around 1.6667, with the next level of resistance after that being 1.6745. In the same way that a failure to break below the trend line would be bullish, a daily close below here could be very bearish, prompting a retest of the descending trend line that the pair broke above, and retested, towards the end of last year."

But, analyst Kathy Lien at BK Asset Management is positive on the pound's prospects vs the US dollar in 2014:

"As we said in our 2014 GBP outlook, housing, banking and global growth are the engines of growth for the U.K. economy in 2014. We expect sterling to continue to outperform most of the major currencies including the euro and Japanese Yen.

"There are no additional U.K. economic reports on the calendar this week but next week's PMI numbers will determine whether sterling has the strength to hit new 2.5 year highs against the dollar and fresh 1 year highs versus the euro."

Luc Luyet at MIG Bank says:

"GBP/USD confirmed yesterday a weakening short-term technical configuration by moving below its previous low at 1.6475 (27/01/2014 low). Monitor the test of the support at 1.6451. Another support lies at 1.6396 (see also the rising channel). Hourly resistances are given by 1.6526 and the declining channel (around 1.6569).

"In the longer term, the break of the major resistance area between 1.6381 (02/01/2013 high) and 1.6466 (10/12/2013 high) favours a bullish bias. However, given the overall overbought conditions, a break of the major resistance at 1.7043 (05/08/2009 high) is unlikely in the next weeks. A key support stands at 1.6305 (25/12/2014 low)."

Euro pound exchange rate forecasts

Luc Luyet at MIG Bank gives his views on the euro pound rate:

"EUR/GBP is moving sideways in what looks like a short-term broadening formation. Hourly supports lie at 0.8210 (24/01/2014 low) and 0.8168. Hourly resistances stand at 0.8269 (30/01/2014 high) and 0.8306.

"In the longer term, the technical structure remains negative as long as prices remain below the resistance at 0.8350 (13/01/2014 high). Monitor the support implied by the 61.8% retracement (of the 2012-2013 rise) at 0.8160. Another key support can be found at 0.8082 (01/01/2013 low."

Euro dollar exchange rate forecasts

"Soft German CPI data accelerated the EUR-USD drop below 1.36 yesterday, but given prospects of new sluggish US economic data, we remain prudent about a further slide lower."

ICN Financial analysts say:

"The pair dropped and the negative expectations were changed since the pair broke 1.3590 levels yesterday covering the stop-loss.

"By examining the graph, we notice that the pair has got out of the ascending channel and is approaching the previous bottom at 1.3507, as the pair might break this level and move straight towards 1.3475 and 1.3445 levels then the suggested target close to the current bearish wave at 1.3365. The negative possibility remains valid by stabilizing below 1.3665, but we will count today of stabilizing below 1.3625 to keep the negative expectations."

MIG Bank say:

"EUR/USD declined sharply yesterday and is now close to its support at 1.3508 (see also the steeper rising trendline). An initial resistance lies at 1.3559 (intraday high). An hourly resistance now stands at 1.3617 (intraday high).

"In the longer term, the recent false breakout near the key resistance area defined by 1.3811 (11/12/2013 high) and the long-term declining
trendline (around 1.3890) suggest a limited upside potential. We favour a gradual corrective phase towards the 200 day moving average
(around 1.3380)."