Exchange Rate Outlook Today: Pound Sterling vs the Euro and US Dollar Shows a Fragile GBP

All suggestions suggest the British pound exchange rate complex is losing upside potential. We consider a handful of the latest available forecasts.

A run of disappointing PMI surveys weighed on GBP last week.

The latest IMM data release shows net GBP long positions extended further in the week to 1 April.

While these may well have pared back slightly over the past week, net GBP long positions are likely to be still sizeable and in the absence of some better than expected domestic data, GBP may well remain vulnerable to the downside," warn Lloyds Bank Research.

Ahead, industrial production and trade data released this week will be of interest. The BoE MPC rate announcement on the other hand will likely be a non-event, with the bank unlikely to make any changes to monetary policy and also unlikely to produce an accompanying statement.

"GBP/USD should see good initial support around the 1.6540 area," say Lloyds.

Note all quotes are reflective of the inter-bank market. Your bank or payment institution is free to levy a rate at their discretion. However, FCA-registered independent providers guarantee to undercut your bank's offer, thus delivering up to 5% more FX. Please learn more here.

Pound dollar exchange rate outlook

For the pound dollar rate, this note from Paul Robson at RBS is certainly worthy of consideration:

"The pace of recovery is slipping behind the BoE's assumed 0.9% qoq run rate for GDP growth and this suggests the good news story for the UK may have become fully priced. At the same time, concerns over growing imbalances may become more widespread.

"The current account deficit has continued to widen and rampant retail sales growth is a worry, sucking in imports. Over the next 12 months, rising political risk and less favourable moves in rate spreads may see more intense focus on the twin deficits. This is a potentially toxic cocktail for GBP. Establish tactical GBP/USD shorts."

Pound euro exchange rate outlook

Commenting on the pound euro rate is Bill McNamara at Charles Stanley:

"Not long ago I highlighted the fact that sterling’s advance relative to the euro was stalling as a result of its failure to break above the long-term downtrend – and that is still the case (at least, for now). There was hardly any change in this pair last week although my view is still that the pound will break above resistance before too long."

Euro dollar exchange rate outlook

Commenting on the euro dollar rate today is Emmanuel Ng at OCBC Bank:

"The combination of the ECB meeting and the US NFP last week has left the EUR-USD materially lower and the pair may remain subdued going ahead with markets still fretting over the potential of further monetary accommodation
from the ECB.

On the CFTC front, note that net leveraged EUR longs were pared in the latest week pre-ECB and if 1.3685 is
successfully punctured, expect a drift towards 1.3650."