Exchange Rate Predictions for GBP vs US Dollar, Euro and Australian Dollar
This exchange rate predictions note sees the potential for further losses in the pound sterling complex in the near-term.
The British pound continues to find the month of March to be a difficult customer with investor enthusiasm waning as markets get the message that the Bank of England will not raise interest rates sooner than they have to.
Resultant losses have seen technical indicators break down, and subsequently predictions have shifted out of favour to the UK unit.
We bring you the latest viewpoints at the start of a new week.
Keep in mind our below quotes refer to mid-market rates, your bank will skew the rate in their favour when passing on a retail rate. However, an independent provider will be able get you closer to the market rate, thus delivering more currency. Find out more.
Pound dollar exchange rate predictions
While the technical forecasts suggest the GBP-USD will remain under pressure, RBS analyst David Simmons sees scope for gains:
"The discussion over first tightening timing became nosier with that Yellen 'six months' reference. But most up for grabs, and for repricing, is what markets think the Fed will do after that first tightening eventually comes. Rate expectations for 2016 are hence the critical (bearish, rates higher) theatre. We are unconvinced that USD has yet bottomed against other Majors and we still like EUR/USD and Cable higher."
Emmanuel Ng at OCBC Bank is decidedly bearish on GBP-USD though:
"Markets may remain less than impressed with sterling prospects in the near term, especially with the EUR-GBP still looking supported. With 1.6500 now atop the pair, risks towards may 1.6450 may heighten intra-day if the broad dollar and if investors latch on to any UK data disappointments.
"On the CFTC front, net leveraged GBP longs increase yet again in the latest week but we caution that its proportion of open interest is at acute levels – leaving the GBP-USD significantly vulnerable to a further pullback."
Euro pound predictions
ICN Financial tell us that the outlook is positive for EURGBP above 0.8285 and the intraday risk-limit is below 0.8160:
"The pair is trading with slight positivity after retesting 0.8325 areas last week. The pair now is moving toward the resistance to be breached at 0.8410, the key for the extension of the upside move toward 0.8500 then 0.8560. Stochastic is attempting to crossover positively to support the upside move that remains valid with stability above 0.8325 and 0.8285."
Euro dollar predictions
Ng is bullish on the euro dollar:
"Despite cautionary comments from the European Council’s Herman Van Rompuy on the strength of the EUR, the common currency was also propped up by the January EZ current account surplus reading. EZ PMIs dominate the EZ calendar today while the German March Ifo and the appearance by the ECB’s Draghi’s on Tuesday may provide further cues ahead of the ECB meeting next week.
"On the CFTC front, leveraged net EUR longs increased in the latest week with the proportion of net open interest beginning to look pregnant by historical standards. If the EUR-USD detaches southwards from 1.3800, initial supports are expected into 1.3735 and 1.3750. Meanwhile, initial resistance is expected on approach of 1.2830.
Australian dollar predictions
We turn to the headline AUD-USD exchange rate for guidance for the broader AUD complex.
OCBC say:
"RBA Rhetoric may potentially sway the AUD this week, with appearances by RBA members on Tue-Wed. markets may continue to take comfort from the AUD’s recent resilience despite the FOMC and China hitters, although the HSBC China PMI this morning may present an immediate focus.
"On the CFTC front, note that net leveraged AUD shorts were reduced significantly in the latest week and this may have been reflected in the aussie’s relative resilience of late.
"Initial resistance is expected going into 0.9135 while 0.9050 may present itself as a first support before 0.9000. In the interim, we retain a positive bias with respect to the pair."