Pound, Dollar and Euro Forecasts UPDATED: Exchange Rate News, Views and Predictions

Exchange rates continue to be driven by US dollar sentiment - gains have seen resistance levels against the euro and British pound broken and we are forecasting the USD to maintain strength despite recent pull-backs.

"The dollar exploded to new 2- and 4-year highs against the euro and a currency basket after an overall solid U.S. jobs report. Nonfarm payrolls jumped 248,000 in September, topping forecasts of 215,000. August got upgraded to 180,000 from 142,000," notes Joe Manimbo at Western Union in response to the solid moves witnessed in the USD at the close of the previous week.

"The market appears to have caught rate hike fever which has powered the dollar stronger across the board and in line for a record 12th straight week of gains versus a currency basket," says the Western Union analyst.

• The pound to dollar exchange rate is 0.12 pct higher on the previous week's close at 1.6103
• the euro to dollar exchange rate is 0.03 pct lower at 1.2652
• and the pound to euro exchange rate is 0.13 pct higher at 1.2727.

(If you are holding out for a better rate DON'T DELAY. Ensure your independent FX provider has the correct buy order for when your rate is hit and the correct stop-loss order incase the market moves further against you. Find out more here. Also note that an independent provider can deliver up to 5% more FX than your bank by coming in tighter on spreads and getting you closer to the wholesale markets, find out more here)

Pound vs Dollar Forecasts: Interest Rate Movements Unsupportive

"GBP lagged yesterday as G10 currencies recovered slightly against the USD. Sentiment towards GBP remains somewhat subdued, underpinned by the market’s relatively dovish rate expectations for the UK; the OIS curve suggests the first rate hike is priced in for May/June 2015," say Lloyds Bank in a morning note to clients.

Karen Jones at Commerzbank tells us the outlook favours further declines in GBP/USD:

"GBP/USD has eroded support at 1.6163/54 (78.6% retracement and 16th September low). This leaves the 1.6053 recent low exposed and failure here will target 1.6012/00 (200 week ma and 50% retracement of the move up from 2013). We would allow for this to hold the initial test ahead of losses to 1.5721 the 61.8% retracement of the move from 2013.

"Current trade: Short 1.6345 Recommended Trade: lower the stop from 1.6405 to 1.6390. Exit 1.6015."

Euro vs Pound Sterling Forecasts

Karen Jones at Commerzbank:

"EUR/GBP has seen a decent rebound just ahead of major support at .7757/44, the mid-August 2012 low at .7757 and the 50% retracement at .7744 (of the entire move up from 2000 to 2008). The rebound has eroded the near term downtrend and we would allow for a deeper corrective phase.

"Current Position: Shorts from .7822 stopped .7840 Recommended trade: Reinstate longs on dips to .7840, add .7830, stop .7785. Exit .7915."

Luc Luyet at Swissquote:

"EUR/GBP is bouncing near its strong support at 0.7755. However, the short-term technical structure is negative as long as prices remain below the hourly resistance at 0.7889 (23/09/2014 high). Another resistance can be found at 0.7952 (intraday high).

"In the longer term, the underlying downtrend favours a test of the major support area between 0.7755 (23/07/2012 low) and 0.7694 (20/10/2008 low) at minimum. A decisive break of the resistance at 0.8034 (25/06/2014 high) is needed to suggest some exhaustion in the medium-term selling pressures."

Euro to Dollar Forecast

Karen Jones:

"EUR/USD is at last seeing a small bounce higher from 1.2571. We would allow for a small corrective rally to its 2 month downtrend, which today is located at 1.2767. Ideally this will cap the topside and provoke failure, however we notice that the Elliott wave count is pointing to a possible 1.2831/1.3000 retracement prior to another leg lower to the 1.2460/78.6% retracement. With a weekly RSI down to 8 it is possible that we will a deeper retracement.

"Current position: Long 1.2615 Recommended trade:. stop 1.2600. Exit 1.2750."

Luc Luyet at Swissquote Research:

"EUR/USD is in a succession of lower highs and lower lows since May 2014. The break of the strong support area between 1.2755 (09/07/2013 low) and 1.2662 (13/11/2012 low) opens the way for a decline towards the strong support at 1.2043 (24/07/2012 low). Intermediate supports are given by 1.2500 (psychological support) and 1.2466 (28/08/2012 low)."

BK Asset Management: What to Look out for in the Week Ahead

Boris Schlossberg at BK Asset Management runs us through the week ahead in foreign currency in the below video: