Near-term exchange rate forecasts: British pound, US dollar, Euro, Australian Dollar, Japanese Yen

By Rob Samson

UBS and MIG Bank offer insights into the likely near-term outlook for the key exchange rate pairings we follow.

Today's exchange rate market action

Sterling was in focus early on in the session; UK Retail Sales dropped by -1.5%m, versus -0.9% eyed.

The decline was primarily driven by supermarket sales while sales at DIY stores was strong. Although the data was weaker than expected the overall year on year figures still registered an impressive 4.3% gain indicating that demand in UK remains robust.

The GBP/USD initially slipped to 1.6610 on the news but quickly rebounded to settle near session highs after traders saw the Public Sector Net Borrowing figures which declined to -6.9B from -9.0B eyed. "The continued improvement in government revenues suggests that the economic expansion in UK remains on track, and that it may indeed be the first G-7 economy to hike rates as this year progresses," says Boris Schlossberg at BK Asset Management, alluding to the continued support being witnessed in the GBP complex.

British Pound vs dollar exchange rate forecast

As mentioned, sterling continues to maintain a positive bid vs the US dollar. Luc Luyet at MIG Bank notes:

"GBP/USD has broken the key resistance at 1.6668 (24/01/2014 high). As long as the support at 1.6600 (see also the rising trendline) holds, a
further phase of strength is favoured. Hourly resistances stand at 1.6742 and 1.6823. Another support lies at 1.6426.

"In the longer term, the technical structure favours a bullish bias as long as the support at 1.6220 (17/12/2013 low) holds. The decisive break of the resistance at 1.6668 opens the way for a move towards the major resistance at 1.7043 (05/08/2009 high). However, a sustainable
move above that level is unlikely in the next few weeks."

UBS say: "Any setback will be viewed as corrective and limited to support at 1.6605. Resistance is at 1.6742, a break above this would open 1.6878."

Euro pound exchange rate forecast

The euro pound exchange rate is meanwhile trading heavier, this in line with a rebounding GBP.

According to a forecast on GBP/EUR from UBS, "the recent sharp recovery was staged after testing critical support at 0.8160. A close below which would be next bearish event, triggering a sell-off to 0.8082. Resistance should hold at 0.8277."

Luyet says:

"EUR/GBP's bounce continues to lose momentum near the resistance at 0.8254 (50% retracement). Monitor the hourly support at 0.8217 (intraday low). Another hourly support lies at 0.8191 (18/02/2014 low), whereas another resistance stands at 0.8280 (06/02/2014 low).

"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 forecast

The euro continues to witness weakness to the latter half of this week's trade.

Nevertheless, "with bullish conditions in place, there’s more upside potential to test trendline resistance at 1.3840. A break above which would open the way to 1.3893. Support is at 1.3674 ahead of 1.3562," say UBS.

US dollar vs Japanese Yen forecast

MIG Bank say:

"USD/JPY has risen and is now challenging (again) the key resistance at 102.70 (11/02/2014 high). The recent succession of higher lows
suggests an increasing buying interest. Hourly supports stand at 101.67 (20/02/2014 low, see also the rising trendline) and 101.39. Another key
resistance stands at 103.44.
 
"A long-term bullish bias is favoured as long as the key support area given by the 200 day moving average (around 100.21) and 99.57 (see
also the rising trendline from the 93.79 low (13/06/2013)) holds. A major resistance stands at 110.66 (15/08/2008 high)."

UBS add: "Resistance is at 103.10, a break above which would open 103.65. Support is at 101.39 ahead of 100.76."

Australian dollar / US dollar forecast

UBS say, "The pair developed fresh selling under critical resistance at 0.9086. Support is at 0.8871 ahead of 0.8730. Only a close above 0.9086 will be a major bullish event."

"AUD/USD made an intraday bullish reversal yesterday, suggesting persistent buying interest. Monitor the horizontal range defined by the support at 0.8928 and the key resistance at 0.9086. Another support lies at 0.8874.
 
"The long-term technical pattern is negative and favours a further decline towards the key support at 0.8067 (25/05/2010 low), as long as prices remain below the resistance at 0.9168 (02/12/2013 high, see also the 200 day moving average)."