Today's Exchange Rate Forecasts: Outlook for GBP Constructive, EUR Bearish, USD Mixed, AUD Mixed

By Rob Samson

The British pound (GBP) has firmed on Friday and the outlook remains constructive. We also hear of how yesterday's rally in the euro dollar rate does not alter what is a bearish outlook.

With risk appetite levels continuing to improve, the majors ended firmer against the dollar on Thursday while the yen also reversed lower across the board.

"Early in the global day, supportive data had pulled the AUD higher against the greenback. Meanwhile, a market likely overfed on dovish expectations took the EUR-USD briefly above 1.3600 after the ECB stood pat on its policy rate at 0.25% and Draghi noted a lack of deflation risks despite remaining sufficiently dovish. In a similar fashion, the GBP-USD also shaded slightly higher after the BOE MPC saw no change in the benchmark rate at 0.50%," says Emmanuel Ng at OCBC Bank.

Today we have seen the British pound (GBP) firm up on the back of some good trade data figures. Ahead, we have the Non-Farm Payroll Report which will of course be closely watched.

Pound Sterling Live has today compiled the following exchange rate forecasts:

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Pound dollar exchange rate forecast

"GBP-USD inched higher slightly post the BOE but the pair remained in well carved ranges. UK Dec 13 industrial production numbers are on tap today (See outcome here) in addition to the US labor market report. An overhang ahead of the BOE Inflation Report meanwhile may continue to temper the near term upside for the pair and a 1.6250-1.6400 range may prevail before the expected event risk tonight." - OCBC Bank.

Craig Erlam says this is still a pro-GBP marketplace:

"Sterling is pushing a little higher this morning following three sessions in which the pair has been stuck in a very tight range. This doesn’t appear to be too much of a case of a battle going on between bulls and bears, as much as it is slightly lower trading volumes and potential uncertainty ahead of today’s hugely important non-farm payrolls figure which I’m sure will significantly widen the trading range.

"What is important is that throughout this week, 1.6260, 50 fib level and previous support and resistance, has held up as a significant level of support. This suggests that despite the lack of gains in the pair, the market is still bullish and clearly keen to protect this level."

"As a reaction to the recent sharp sell-off which stalled just above main support at 1.6220, there’s scope for upside in the near-term. Resistance is at 1.6411 ahead of 1.6509." - UBS.

Euro dollar exchange rate forecast

"The latest recovery does not change the bearish picture as long as resistance holds at 1.3639. The risk is for resumption of downtrend from here to break through support 1.3458 and then test 1.3400." - UBS.

"The ECB is expected to publish its revised macroeconomic forecasts next month note that market expectations for further monetary
accommodation remain very much on the table despite yesterday’s ‘disappointment’. The US nonfarm numbers may put the next twist on the pair and it remains to be seen if the EUR-USD can stage a meaningful challenge of its 55-day MA (1.3644)." - OCBC Bank.

"The pair failed to close above 1.3608, the 50% retracement of the move from 24 January highs to 3 February lows, as well as the 20 and 100-day SMAs, having reached highs just below the 200-period SMA on the 4-hour chart. Clearly there is significant resistance around this level but that doesn’t mean it won’t be broken in the coming days. That said, the pair does still remain in a downtrend having recorded lower lows and lower highs since the end of last year. If we see a break back below the ascending trend line, which dates back to 6 September, that the pair broke back above during yesterday’s rally, it would suggest that the move higher was only temporary." - Alpari.

Dollar Yen forecast

Citigroup: "JPY weakened as funds flew out of safe-haven currencies such as JPY, amid receding market risk yesterday. The BOJ will likely expand its QE after mid-2014, which may undermine the JPY in medium term. Technically, USD/JPY may rebound to 105.44, with support at fibo 0.50 of 100.60."

"Firmer US Treasury yields lifted the USD-JPY and the pair may remain more a function of USD dynamics despite the BOJ indicating no inclination for additional monetary easing measures. Pending the US labor market numbers, the pair may continue to be trapped in familiar 101.30- 102.70 band. At this juncture however, markets do not seem ready as yet to re-engage aggressively in a bullish posture for the pair." - OCBC Bank.

"The pair has been consolidating over the past few weeks, and there’s potential for more downside. Support is at 100.76 ahead of the critical 99.96. Resistance is at 102.41 ahead of 103.44." - UBS.

Craig Erlam at Alpari says:

"The dollar is looking more bullish against the yen this morning, despite trading slightly lower on the day. In recent days the pair has rebounded nicely off the 50 fib level, the move from 8 August lows to 2 January highs, closing above Senkou Span B on each day, before breaking through two descending trend lines on the 4-hour chart.

"The pair is finding resistance this morning around 102.10, the 50% retracement of the move from 29 January highs to 4 February lows, with the 50-period SMA on the 4-hour chart and the Tenkan-Sen on the daily also currently blocking a move higher. If we see a break above here, the pair should find further resistance around 102.40, 61.8% retracement of the shorter term move and a previous level of resistance. Above here further resistance should be found around 103."

Australian / US dollar exchange rate forecast

"There’s risk for extension of the recent recovery but from a broader perspective upside will be limited to resistance at 0.9086. Support is at 0.8874 ahead of 0.8730." - UBS.

"The RBA Quarterly Statement on Monetary Policy this morning saw GDP and core inflation forecasts revised higher but note that the repot also noted that “the exchange rate could decline further over time”. Note that if the pair sinks below its 55-day MA (0.8932), the RBA meeting inspired impetus to push higher may be whittled down." - OCBC Bank.