Could the pound dollar exchange rate hit 2? Latest GBP/USD forecast

We consider the latest long term technical forecast for the pound dollar exchange rate, issued by the Research Desk at Afex.

The British pound to US dollar exchange rate (GBP/USD) is seen trading 0.05 pct higher on a day-to-day basis as we approach the end of Monday's trading session.

It has been a relaxed day of trade with traders keeping to well-treaded ranges on the global FX markets.

A look at the US dollar exchange rate complex shows:

Forecast for the pound dollar exchange rate: Is 2.0 possible?

Today we hear from the Research Desk at Afex, the foreign exchange brokerage who remain bullish on GBP/USD.

Of course, the bullish stance does requires some key exchange rate levels to be breached:

"The market reacted negatively to its realisation of 1.6750 primary objectives last week and though Sterling values can still re-base with a view to achieving secondary targets at 1.7000 this latter level is likely to present strong (trend limiting) resistance at least from a short term stand point.

"If an upside breach is engineered here the long term outlook would improve exponentially and indeed prices will then be argued to have re-entered a higher range which extends toward 2.0000."

Afex note that at present 1.4000-1.7000 effectively defines the lower holding pattern. For the moment 1.6500 is thus still acting as a pivot point and may well come back into focus again first/next.

British pound runs into selling pressure

The pound has also run into selling pressure this morning, dropping below the 1.6600 handle on selling pressure mainly on the cross currencies.

"GBP/USD is still positioned for further gains if the market can hold above the 1.6600 level; however, comments over the weekend from Governor Carney reiterated that despite the strength of the U.K. recovery thus far, the Bank is still willing to support the economy if so required," notes Jean-Pierre Dore at Western Union.

Dollar stands to benefit from upcoming economic data

Those hoping for higher pound dollar rates must be aware that we could be in for a pro-USD period of FX trading.

Analyst Omer Esiner at Commonwealth Foreign Exchange notes:

"he U.S. dollar was stuck within striking distance of its recent lows overnight. The greenback, which ended last week in positive territory, was marginally weaker in a generally quiet trading session.

"The dollar found some support last week from minutes from the latest Fed meeting, which saw central bankers remain committed to their plan to continue reducing monetary policy stimulus at a predictable pace throughout the year.

"The dollar stands to benefit from upcoming economic figures, which suggest the recent downturn in the economy was the result of inclement weather and that the Fed will indeed wind down its asset purchases altogether by the end of this year."