Pound Sterling, Euro, US Dollar Exchange Rate Outlook and Forecasts

Forex rates for reference

We see the following levels in the mid-week session:

• The pound to euro exchange rate (GBP/EUR) is at 1.2638.
• The pound to dollar exchange rate (GBP/USD) is 0.24 pct lower at 1.6905.
• The euro dollar exchange rate (EUR/USD) is 0.23 pct lower on a daily basis at 1.3377.

(Note: If you are hoping for a better exchange rate then don't hesitate, ensure your currency provider has the relevant stop-losses or buy orders in place. An independent FX provider could also execute your transaction at rates that can be up to 5% more beneficial than the rates offered by your bank. Find out more.)

Pound sterling breaks below key level, more losses ahead?

It’s taken most of the month of July but sterling is finally below the key $1.70 level, marking its weakest in a month.

"Sterling gave back notable ground this week in central bank minutes that stopped short of cementing an early rate hike and growth figures that were spot on forecasts," says Joe Manimbo at Western Union.

Europe’s third biggest economy grew 0.8 percent during the April to June quarter.

Manimbo adds:

"With the economy largely sustaining the solid momentum that has many betting on a U.K. rate hike by early next year, other factors are likely behind the pound’s pullback.

"Among them: an approaching referendum in Scotland in mid-September on whether it should remain in the U.K. Uncertainty over the vote has the potential to weigh on sterling over coming weeks."

For further technical forecasts on the pound / euro and pound / dollar rates please see our latest report.

Euro exchange rates: German sentiment sours

The euro remains vulnerable owing to a lack of supportive Eurozone economic data.

Recent losses saw the euro dollar rate break lower on disappointing news on German businesses.

Western Union tell us:

"Sentiment among thousands of businesses in Europe’s biggest economy soured by the most in nine months as the Ifo index slid to 108 in July from 109.7 in June.

"Forecasts called for a smaller decline to 109.4. The report captured the toll the crises in Ukraine are taking on business morale. The weight of the negative factors driving the euro have the potential to push it further southward over the short-run.

"They include the hole the bloc’s economy remains stuck in which could get bigger if Russia were to soon get socked with tougher financial sanctions and the European Central Bank’s still unlocked door to looser policy steps such as aggressive QE bond purchases."

Dollar exchange rates: A daunting week ahead

The US dollar exchange rate complex got a fresh boost in another positive print on the U.S. economy.

Durable goods topped forecasts with a 0.7 percent rise in June while the all-important gauge of business spending also beat expectations with a 1.4 percent jump.

"The dollar now enters a daunting coming week with a better base from which to build. But to strengthen further it has to get past a Fed decision on July 30 and the next big look at the job market two days later," says Manimbo.

The weight of those important events risks making or breaking some of the greenback’s surge.

"Don’t risk squandering the dollar’s advance, importers. Lock in some of the greenback’s appreciation using Forward Contracts," says Manimbo.