Exchange Rates: Pound Dollar Forecast Higher, Euro Dollar Downward Channel, Euro Pound Could Fall Further

Before looking at the forecasts, the following FX levels are noted at the weekend:

1. The pound to dollar exchange rate (GBP/USD) is at 1.6600.
2. The pound to euro exchange rate (GBP/EUR) is at 1.2646.
3. The euro to dollar exchange rate (EUR/USD) is unchanged at 1.3132.

PS: All the above are spot market quotes, your bank will affix a discretionary spread to the figures. In order to get as close to the market rate we suggest consulting an independent FX provider, the delivery of up to 5% more currency is possible in many instances.

The pound dollar exchange rate forecast

Luc Luyet at Swissquote Research:

"GBP/USD is trying to bounce after its bullish intraday reversal made on 25 August. However, a decisive break of the hourly resistance at 1.6601 (21/08/2014 high) is needed to suggest weakening selling pressures. Other hourly resistances can be found at 1.6679 and 1.6739. Hourly supports stand at 1.6537 and 1.6501 (25/08/2014 low).

"In the longer term, the break of the key support at 1.6693 (29/05/2014 low, see also the 200 day moving average) invalidates the positive outlook caused by the previous 4-year highs.

"However, the lack of medium-term bearish reversal pattern and the short-term oversold conditions do not call for an outright bearish view. A key support stands at 1.6460 (24/03/2014 low)."

JPMorgan say:

"Following the latest and decisive break below the 200 DMA (now resistance at 1.6690) the bears still in full control, shooting for an extension towards 1.6394 (int. 38.2 %).

"But having managed to break above Ichimoku-resistance with the hourly lagging line we see the door for a temporary bounce to 1.6690 or 1.6738 (200 DMA/minor 38.2 %) as open.

"Only above the latter we’d see extended recovery potential to 1.7013/32 (daily breakout line/(int. 76.4 %)."

Euro to Dollar Exchange Rate Forecast

Luc Luyet at Swissquote Research:

"EUR/USD remains weak as can be seen by the failure to break the hourly resistance at 1.3220 (25/08/2014 high). Furthermore, the technical structure is negative as long as prices remain below the hourly resistance at 1.3297 (22/08/2014 high). An hourly support lies at 1.3153, while a key support stands at 1.3105 (06/09/2013 low).

"In the longer term, EUR/USD is in a succession of lower highs and lower lows since May 2014. A long-term decline towards the strong support area between 1.2755 (09/07/2013 low) and 1.2662 (13/11/2012 low) is favoured.

"However, in the shorter term, monitor the key support at 1.3105 (06/09/2013 low) given the general oversold conditions. A key resistance lies at 1.3444 (28/07/2014 high)."

JPMorgan analysts tell us:

"The broad rally of the USD has clearly lost some momentum as it was facing strong resistance barriers across the board suggesting that further temporary setback could be due in the near term.

"Specifically in EUR/USD, the broader down-rotation remains intact but faces an increased bounce risk above 1.3104/01 (pivot/weekly Ichimoku-lagging).

"Only below the latter we’d see fresh down-potential to 1.2916/08 (weekly trend/Fib.-projection). A temporary bounce (minor wave 4) would however look fairly limited to 1.3362/94 (minor 38.2 %/daily trend) where a fresh selling opportunity would arise," JPM clarifies.

"Only above the latter and above pivotal resistance at 1.3503 we’d see extended recovery potential to 1.3646/1.3701 (200 DMA/pivot) and to 1.3795 (int. 76.4 %)."

Euro to Pound Exchange Rate Forecast

Luc Luyet at Swissquote:

"EUR/GBP continues to weaken after its successful test of the key resistance at 0.8034. The break of the rising trendline favours further weakness towards the recent low at 0.7874. A first support lies at 0.7916. An hourly resistance can now be found at 0.7970 (20/08/2014 low).

"In the longer term, the break of the key support area between 0.8082 (01/01/2013 low) and 0.8065 (05/06/2014 low) opens the way for a full retracement of the rise that started at 0.7755 (23/07/2012 low). Another strong support stands at 0.7694 (20/10/2008 low).

"A break of the resistance at 0.8034 (25/06/2014 high) is needed to suggest some exhaustion in the medium-term selling pressures."