British Pound Forecasts Against the Euro, US Dollar, Canadian, Australian and NZ Dollars

Amidst the heightened volatility in currency markets we consult the British pound's charts to cut out the noise and attempt to build a best-guess as to the currency's next moves.

Negative investor sentiment and flight to safety flows continue to dominate foreign exchange markets creating a background in which sterling tends to suffer against the euro.

However, the US dollar has not been so hot of late with Federal Reserve Chair Yellen not offering enough confidence on the trajectory of both the US economy and her Bank's policy making. Indeed, the dollar index has fallen on the last 12 of 14 days.

Then the commodity dollar bloc, which are usually expected to suffer in current conditions is holding up pretty well.

Before we look at the technicals, it is worth pointing out that next week could be better.

A cheery note from BNP Paribas points out “the outlook for the GBP is positive, and we expect solid UK GDP and accelerating wage growth to prompt the BoE to deliver tightening sooner than the market expects. The UK’s balance of payments position is strong, with the current account deficit financed by FDI and portfolio investment inflows.”

Pound to Euro Outlook

The GBP to EUR conversion has reached new lows at 1.2699 in the midst of recent market selling.

The weekly chart has a large head and shoulders along the top, which has breached its neckline.

The pair has still not met its minimum target at the 61.8% Fibonacci extension of the height of the H&S at 1.2630, which is also the level of the 200-week MA.

MACD is very bearish on the weekly chart, and supports further downside.

As in the daily chart, a move below the 1.2699 lows would probably confirm a probably continuation down to an eventual target at 1.2630.

Pound to Dollar Outlook

The GBP to USD pair has formed a corrective a-b-c pattern higher and pulled-back. Our most recent quote on the exchange rate is at 1.4449.

Currently I see a marginal possibility that further upside will evolve, however, there is substantial resistance overhead, including the R1 Monthly Pivot, the 50-day MA and resistance from the lower border of the previous descending wedge, clustered around 1.4680.

It would take a clear break above this resistance trio to confirm a continuation higher, such as would occur it the pair broke above 1.4775 for example.

Such a move would be expected to move up to the upper border of the falling wedge at around 1.4870.

There is a possibility the longer-term down-trend could resume from here, which would be confirmed by a break below 1.4275, to confirm further downside to the previous lows at 1.4079.

Pound to Australian Dollar Outlook

The GBP to AUD conversion is showing signs of underlying strength but price action remains mixed. 

The pair broadly remains in a short-term down-trending channel within a larger long-term up-trend. 

Upside is capped by the 50-day MA and the upper border of the down-sloping channel at around 2.0500.

The R1 Monthly Pivot is situated at 2.0720, followed by the 200-day MA at 2.1027 – revealing several strata of strong resistance above.

Nevertheless, both MACD and OBV (although it is not shown) are converging bullishly with price, and MACD has converged on three separate occasions, which is a bullish combination of signals.

MACD measures momentum and OBV is a type of volume indicator.

Ideally I would want to see a clear break above R1, indicated by a move above 2.0830 to confirm more upside, with a target at just below the 200-day, at 2.1000.

Any further downside is stymied by the trend-line at 1.9970 as well as general round-number psychological support at 2.0000.

A clear break below the trend-line, which would be confirmed by a move below 1.9890, would probably signal a continuation of the bear trend to the S1 Monthly Pivot at 1.9737.

Pound to New Zealand Dollar Outlook

The GBP to NZD exchange rate is weakening, and possibly resuming its down-trend. Our last quote on the pair is at 2.17.

It will probably fall to the S1 Monthly Pivot at 2.1516 and the key December 31 lows at 2.1512, four points below.

A clear break below these levels, signalled by a move below 2.1445 would probably set off a stronger bear move, which would likely move all the way down to the S2 Monthly Pivot at 2.1074 - as the former down-trend resumed and gained significant traction and conviction.

MACD is showing a lack of momentum in the current move lower, so a bearish break lower is by no means assured. 

Pound to Canadian Dollar Outlook

This GBP to CAD exchange rate is at the floor of a long sideways consolidation, box pattern, or possible double top. Our last quote on the pair is at 2.0129.

Untypically for a reversal pattern, however, there is a lot of buying volume on the right shoulder, allowing for the possibility of a continuation higher eventually.

Money Flow, which is a measure of underlying buying interest useful for analysing sideways markets, is at its lowest since April 2015 – a very bearish sign.

The mixed signals, however, make it difficult to predict in which direction it will break.

However, a clean breach of the neckline at 1.9732 - confirmed by a move below 1.9690 - would probably confirm a move down to support from the S1 Monthly Pivot and the trend-line at 1.9535.

Alternatively, a break above the pattern highs at 2.0949 would probably lead to a move up to resistance from the R2 Monthly Pivot at 2.1279 initially.