British GBP/USD Rate: GBP/USD Falls Below 1.7, But Longer-Term Forecasts Suggest Rises Ahead

However, as mid-week foreign exchange trade confirms, the GBP is prone to downside risks in the near-term.

At the time of writing the pound to dollar exchange rate (GBP/USD) is trading 0.17 pct in the red having reached 1.6957, well off this year's highs.

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The UK currency has fallen on Tuesday after the Bank of England's senior figures appeared before the UK's Treasury Select Committee to testify as to where they are taking monetary policy.

Essentially, the Bank of England is seen to be back to its dithering mode. Last week Governor Carney hinted to markets that an interest rate rise could come as soon as the end of 2014. Now it seems markets may have been right in pricing it in early to mid 2015.

Is the Bank dithering? Labour MP Pat MacFadden thinks so; he compares the Bank to an unreliable boyfriend - sometimes hot and sometimes cold.

For the pound sterling rally to continue markets wanted to hear the same confident noises made by Carney in his Mansion House appearance repeated.

Pound to Dollar Exchange Rate Forecast: GBP/USD Bullish Bias Favoured

Noise aside, what are the charts telling us as to where the UK currency is headed next?

Luc Luyet, technical analyst with Switerland's Swissquote Bank says the near-term outlook remains broadly favourable to the UK unit:

"GBP/USD continues to challenge the major resistance at 1.7043. A bullish bias is favoured as long as the hourly support at 1.6923 (18/06/2014 low) holds. An initial support can be found at 1.6985 (intraday low).

"In the longer term, a bullish bias is favoured as long as the support at 1.6693 (29/05/2014 low) holds. The persistent buying interest favours an eventual break of the major resistance at 1.7043 (05/08/2009 high). Other resistances can be
found at 1.7332 (see the 50% retracement of the 2008 decline) and 1.7447 (11/09/2008 low)."

Dollar exchange rate complex sticks to tight ranges

There is little action to be had in the broader USD complex at present with markets keeping the rate tied to recent levels.

According to Lammens, for a break in stalemate in the euro dollar exchange rate to take place a substantial change in the US/German interest rate differentials must occur.

"The 2-year differential, the most important one for the currency markets, hardly changed yesterday. The 10-year differential again touched the cycle top of 130 basis points, but for now it didn’t help the dollar. The current interest rate differentials will help to cap the topside of the euro though," says Lammens.

Furthermore, "Before the Fed policy decision, we had a cautiously negative bias on EUR/USD. In a longer term perspective, the gradual rise of the dollar against the euro will probably stay intact.

"However, short-term we don’t see a strong enough trigger for EUR/USD to break below the 1.3503/1.3477 support in a sustained way. We amended our short-term bias to neutral. The first short-term reference on the topside is seen at 1.3677."