Pound Euro Exchange Rate Higher But US Dollar Strength Expected to Dominate

Looking at the latest exchange rates we see the pound to euro rate is 0.31 pct higher on a day-on-day basis at 1.2735.

The pound to dollar exchange rate is 0.32 pct higher at 1.6339.

GBP Pound: Relief For Now

After an initial relief rally as the Scottish No vote was announced, Pound Sterling entered the weekend lower as profit-taking took place.

Scotland voted 55.3% in favour of a No vote, while 44.7% voted in favour of independence.

Even though the Union stayed united providing near term confidence, over the longer term uncertainty endures for both the UK and the BOE

The week started with tremendous risk, but nothing materialised and even volumes came down from recent highs

The political tensions in the UK could even delay BOE interest rate rises further.

But based on fundamentals, Pound Sterling should outperform over the coming months, reclaiming some of its lost ground against the US Dollar and rallying against the Euro.

Trend Line For Euro to Pound

The Euro to Pound Sterling exchange rate (EUR/GBP) has continued lower this week, given the Scottish referendum and TLTRO announcement this week.

However, the pair may still be worth watching as they approach a major trend line with potential for a spike.

Primarily the trend is to the downside and price action has stayed well below the middle bollinger band for the most part of the past year.

If there is a spike higher, the 0.78 level represents the meeting point of the descending trendline and the ascending trendline.

The first level of resistance if it moves higher would be 0.787.

US Dollar: From Bull To Bull

The Fed keeping its ‘considerable period’ language was viewed as pacifist.

The market made an effort to talk up the uncertainty surrounding forecasts and the prospect for policy deviation from expectations.

However without clear guidance either way from the Fed, the US Dollar strength and bull trend is expected to continue in the near term, with only its path slightly dampened by the week’s events.