Exchange Rate Forecasts: GBP and EUR Set to Recover Against Wounded US Dollar

Pound Sterling Live brings the latest selection of forecasts for the British pound, euro and dollar from those leading names in the foreign exchange industry whom we follow.

It's been an exciting week on global exchange rate markets with massive swings being witnessed as market volatility spikes once again.

Indeed, we note that interest amongst both traders and those looking to make international payments has spiked in line with this rising volatility.

Our forecasts aim to aid such readers better form a decision.

Exchange Rates Today (markets closed):

• Pound to euro conversion: 1 GBP = 1.2604.
• Euro to pound conversion: 1 EUR = 0.7933.
• Pound to dollar conversion: 1 GBP = 1.6087.
• Euro to dollar conversion: 1 EUR = 1.2734.

Be aware that the above market rates will attract a spread charge from your bank, this is how they deriver profit from FX provision. However, by actively seeking out a better rate with an independent FX provider you could get closer to the market and save up to 5% more FX in the process. Please find out how.

Pound Dollar Exchange Rate Forecast: Gains are Coming for GBP

An interesting viewpoint from Manuel Oliveri, FX Strategist at Crédit Agricole who reckons markets should be looking to take advantage of the recent dips in the GBP:

"For most of the last few weeks falling external demand expectations as related to weaker Eurozone growth momentum have been weighing on UK growth and interest rate prospects to the detriment of the GBP.

"However, in an environment of firm services sector related business activity and improving labour market conditions there is limited room left of further falling monetary policy expectations. Accordingly we see limited room of the GBP correcting lower from the current levels.

"On the contrary, we remain of the view that the currency should be bought on dips, for instance against the CHF.

"This is also due to the view that risk sentiment is unlikely deteriorating further from the current levels."

Meanwhile, analysts at BNP Paribas have confirmed they are likely to ease back on their pro-USD expectations for the time being:

"We continue to expect Fed expectations to rebuild in the months ahead, but the extent of this week’s reversal suggests it will take another period of consistent data improvement and Fed messaging for markets to confidently return to pricing for rate hikes to begin by mid-2015."

Euro Dollar Exchange Rate Forecast: A Bounce is Possible

There is no shortage of analysts out there lining up to call further downside in the euro dollar exchange rate.

However, the short-term offers potential gains for those brave enough to bet on euro gains.

More from Manuel Oliveri who tells us the euro has space to advance against the US dollar in the current environment:

"We remain of the view that elevated speculative short positioning and further stabilizing monetary policy expectations will lead to a further correction higher in EUR/USD. Weaker than expected US retail sales should come to the detriment of both, inflation and growth expectations.

"This in turn should make a case of Fed members trying to dampen investors’ Fed rate expectations further. This stands in contrast to the ECB, which is unlikely communicating a more aggressive monetary policy stance anytime soon as more time is needed in order to evaluate the latest policy measures' impact on the economy

"Stabilising monetary policy expectations should increase position squaring-related EUR upside risk, especially when we consider that positioning remains close to elevated territory."

Euro Pound Exchange Rate Forecast: Are Losses About to Resume?

The euro has enjoyed a renaissance against the pound sterling as of late. Can it continue?

Not so suggests forecaster Luc Luyet at Swissquote Research who cites a longer-term downtrend remaining intact:

"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."

We note that this level has not been broken and the break lower into the 0.790's would suggest that the euro pound rate could be re-entering its downtrend.