Exchange Rates Today: The Pound, Euro and US Dollar Forecasts, News and Comment

The stand-out stories on global FX at present remains the the strengthening U.S. dollar and the under-pressure British pound (GBP).

However, at the time of writing we note that the respective trajectories have steadied as positions become stretched:

• The pound to US dollar exchange rate: 0.01 pct lower, 1 GBP converts into 1.6209 USD.
• The euro to US dollar exchange rate: 0.03 pct higher, 1 EUR converts into 1.2922 USD.
• The euro to pound exchange rate: 0.04 pct higher, 1 EUR converts into 0.7971 GBP.

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Pound Rate Today: Relief Rally, But Can it Continue?

The GBP exchange rate complex has enjoyed a relief rally in the mid-week session, the cheaper currency is seen as being attractive to those with money transfer needs at the current time.

We don't see the gains as any kind of sustainable movement to the upside. Steer clear until the outcome of the vote is known.

However, we expect much volatility ahead, Omer Esiner at Commonwealth Foreign Exchange tells us the Scotland vote on independence remains a thorn in the side of the GBP:

"The pound remains deeply troubled by investors’ lack of clarity on the vote and on the future of key issues like what will happen with national debt, the currency, trade, taxes, oil revenues and military bases in the event of a “yes” vote for Scottish independence next week."

Euro Rate Today: Relief as Support Holds

The euro dollar exchange rate currently resides at a long-term support level - we believe it will take a notable negative news event to push the currency pair through this floor.

"The euro has found some breathing space against the greenback as it has so far gone today’s session without slumping to new 14-month lows. Underlying sentiment remains poor, however, as much divergence remains between the U.S. and Europe in terms of overall economic strength and expectations for future monetary policy," says Joe Manimbo at Western Union.

The European Central Bank (ECB) seems in the early innings of loosening policy while the Fed appears in the late innings.

According to analysts at SEB Group are forecasting further declines, but beware over-stretched conditions:

"Short-term trend-following tools remain in negative positions but price action turned the back to trend yesterday and the 1.2990-1.3045 area looks exposed for a test. But the upside correctional case would start to wither already on a break back under 1.2902. Current intraday stretches are located at 1.2875 & 1.2970."

US Dollar Rate Today: Forecasting More Gains Ahead

The dollar held broad gains and kept near its strongest overall levels in 14 months.

The dollar continues to reap the fruits of better economic times in the U.S. which has the market focused squarely on the Fed. U.S. yields have risen, with the 10-year above the key 2.50 percent level.

"The yield jump stems from a Fed survey this week that sketched a more hawkish outlook for U.S. rate rises, suggesting hikes may come sooner, with the pace of tightening a bit faster than markets have anticipated," says Manimbo.

The analyst believes the dollar would stand to enjoy accelerated gains once the Fed drops from its statement the reference that rates likely wouldn’t increase for a ‘considerable time.’

Analysts at BNP Paribas are forecasting further gains ahead:

"The push higher in US long-end yields, with the US 10-year yield trading above 2.5% for the first time since before the release of the July employment report, was probably damaging to currencies like the AUD and NOK which have been sensitive to global bond market sentiment.

"USDJPY also pushed higher, reaching new 2014 highs just shy of 106.50, and here we would focus on the push higher in US 2-year yields through last week’s pre-data highs as the main catalyst."

BNP Paribas stays longs USD/JPY from 103.20, and short AUD/USD from 0.9345.