Will the USD Rally Continue, Can GBP Benefit from Better Interest Rate Expectations?

We tap the finest exchange rate forecast sources in global FX to bring you the latest predictions on the US dollar (USD), the euro (EUR) and British pound (GBP).

• The pound to euro exchange rate: 0.05 pct lower, 1 GBP = 1.2696 EUR.
• The pound to dollar exchange rate: 0.51 pct down, 1 GBP = 1.6036 USD.
• The euro to dollar exchange rate: 0.46 pct lower, 1 EUR = 1.2632.

If you are holding out for better rates don't risk it - ensure you have the correct protective and buy orders in place should the market move against you, find out more.

Beware: The above are spot market quotes, your bank will affix a discretionary spread to the figures. Note that an independent FX provider is able to provide up to 5% more currency in some cases by getting closer to the market, learn more.

Euro Dollar Forecast: Is the Tide Turning?

Could the euro be about to rise against the US Dollar?

Not ready to make an outright pro-EUR call, but warning that the declines could be over, is Camilla Sutton at Swissquote Research:

"Technicals are warning of a shift in momentum as the MACD turns into buy territory, candlesticks warn and the 4‐day MA flirts with a cross above the 9‐day MA.

"We see this as a sign of caution (not a buy signal).

"Support lies at the recent low of 1.2501, a break below here would put the bears firmly back in control; resistance lies at the recent high of 1.2702; a close above here would warn of a temporary up move."

Looking ahead, on the fundamental front the euro faces heightened risk next week in data on the German investor, and euro zone numbers on industrial production and inflation.

Looking at the longer picture, "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)," says Luc Luyet at Swissquote Research.

Pound Dollar Forecast: Still More Downside

While there may be near-term risks of some GBP/USD upside if the dollar enters a much-needed period of consolidation, the outlook does tend to favour further declines in GBP/USD.

Commenting is Emmanuel Ng at OCBC Bank:

"We reinstitute a bearish GBP-USD slant (spot ref: 1.6055) targeting 1.5800 with a stop laced at 1.6185.

"With little to shift or strengthen hawkish BOE expectations at this juncture, the pair may remain susceptible to potential dollar strength."

Also warning of further declines is Camilla Sutton at Scotiabank:

"Bearish — with studies still warning of downside risk and spot so far failing to close above Friday’s open of 1.6145."

"In the longer term, the collapse in prices after having reached 4-year highs has created a strong resistance at 1.7192, which is unlikely to be broken in the coming months. Despite the recent short-term bearish momentum, we favour a temporary rebound near the support at 1.5855 (12/11/2013 low). A resistance lies at 1.6525," says Luc Luyet at Swissquote Research.

Euro to Pound Forecast: Patience Required

The outlook for the euro remains as challenging, but this does not necessarily mean the GBP has continued to hammer the shared currency lower.

Piet Lammens at KBC Markets reckons:

"Of late, we indicated that it might be difficult for EUR/GBP to break the key 0.7755 support.

"After the recent rebound of sterling and the soft comments from the BoE minutes, investors are pondering the chances for further sterling gains.

"The focus for sterling trading should now return to the economic fundamentals and to the guidance from the BoE on policy normalisation.

"We wait for a more pronounced uptick to reconsider EUR/GBP shorts."