Sterling vs Dollar vs Euro: Exchange Rate Forecasts on Thursday 20th March

By Gary Howes

The Thursday technical forecast note sees the pound sterling coming under pressure against the US dollar and threatening to negate a medium-term uptrend. A once bullish EUR is also waning against an improving US dollar.

The US dollar is on the front-foot as currency markets begin to see clear signs of an interest rate hike on the horizon.

The dollar exchange rate complex outperformed on Wednesday after Fed Chair Yellen told markets that the first rate will most likely be 6 months after Quantitative Easing ends.

(Note: For purpose of analysis all figures are indicative. Rates available to retail buyers are subject to the discretionary spread affixed by your bank. An independent FX provider will however offer to come in tighter on the spread, thus delivering up to 5% more FX. Find out more.)

Pound dollar forecast: Is the Cable bull-run about to be negated?

Important times for the headline pound dollar exchange rate. As noted by Luc Luyet at MIG Bank:

"GBP/USD made new lows yesterday and is now  approaching the support implied by the rising  channel (around 1.6454). Hourly resistances are given by the shorter term declining channel (around 1.6636) and 1.6666.

"In the longer term, a break to the downside out of the rising channel would negate the current bullish bias implied by the break of the  resistance at 1.6668 (24/01/2014 high). A strong horizontal support stands at 1.6220 (17/12/2013 low)."

The technical team at UBS have meanwhile urged caution on GBP-USD, noting the outlook has turned neutral:

"The pair extended its setback on Wednesday trading below 1.6537. This suggests more downside potential in the near-term before bullish trend resumes. Support is at 1.6470 ahead of 1.6339. Resistance is at 1.6718."

Euro dollar forecast: EUR running out of steam?

The euro is looking less and less bullish. As noted by analyst Boris Schlossberg at BK Asset Management:

"The EUR/USD has once again drifted lower to test support at the 1.3800 figure as Angela Merkel addressed the German Parliament on the issue of sanctions against Russia for its annexation of Crimea. The heightened political tensions along with what is now viewed as a more hawkish US monetary policy could continue to pressure the unit lower as the day progresses."

Also commenting on this pair is Karen Jones at Commerzbank:

"EUR/USD has sold off from key levels, (1.3958 50% retracement of the sell-off from the 2008 peak), and has sold off to the 20 day ma and short term uptrend at 1.3815/04.

"This is likely to prompt a small rebound, but we would look for intraday rallies to now struggle 1.3855/80. Given the 13 count on the daily and the complex divergence of the RSI, the risk has increased for a trend break. Failure here will target initially 1.3643, the end of February low."

Euro pound forecast: Has the rally ended?

The euro pound rally shows signs of easing, however, this does not mean the rally is over.

Piet Lammens at KBC Markets comments:

"At the same time, the EUR/GBP rebound shows signs of running into resistance in the 0.84 area. Further confirmation of this pattern is needed, but we look to reinstall/add EUR/GBP exposure in case of return action to the 0.84 area."

Staying bullish on the pair are UBS:

"With bullish trend in place, there’s scope for extension of the recent strength to 0.8405, a break above this would open the way to 0.8467. Any setback in the interim will be limited to support at 0.8308."