– Written by


David Woodsmith

STORY LINK Pound Sterling to Euro Forecast: GBP Vulnerable to Russia Tensions Despite EUR Weakness

The British Pound stayed pinned near two-month lows against the Euro at 1.1440, with the Pound to Euro exchange rate (GBP/EUR) weighed by weak UK data, geopolitical jitters and fragile risk sentiment.

Analysts warn Sterling could suffer more than the euro if Russia tensions escalate, while fresh German IFO weakness underlines Europe’s sluggish growth backdrop.

Danske Bank still sees the pair sliding towards 1.1240 on a 12-month view.

GBP/EUR Forecasts: Near 2-Month Lows

The Pound to Euro (GBP/EUR) exchange rate has remained on the defensive and trading just above 1.1440, close to 2-month lows recorded on Tuesday.

The Pound found it very difficult to make headway in global markets even with tailwinds for global equity markets which suggests underlying vulnerability while the Euro has drifted lower.

The FTSE 100 index posted significant losses on Wednesday following a dip on Wall Street and the Pound tends to be sensitive to risk conditions.

If geo-political tensions with Russia intensify, the Euro and Pound would both be at risk, although Sterling would potentially be hit harder.

A drop below the July low near 1.1420 would risk further losses.

Danske Bank expects gradual GBP/EUR losses to 1.1240 on a 12-month view, but added; “The key risk to seeing EUR/GBP trade substantially higher than our forecast is a sharp sell-off in global risk and/or renewed focus on the UK’s fragile fiscal position.”

In rhetoric on Tuesday, President Trump shifted his position on Ukraine and suggested that it could regain all the territory that has been lost. He also called for a more aggressive NATO stance against Russia which could increase tensions within Europe.

ING commented; “If anything, there are downside risks for the euro and even more for higher-beta European currencies as Trump told EU allies to shoot down Russian planes violating NATO airspace.”

Rabobank noted the stronger tone in the latest NATO statements.

It added; “So while can only speculate about the next steps taken by NATO or Europe, opinions appear to be shifting and there can be little doubt that whatever comes next is going to be even more costly for Europe in many respects.”

The German IFO business confidence index dipped to 87.7 for September from a revised 88.9 previously and below consensus forecasts of 89.3.

The current assessment and expectations components both declined on the week.

According to the IFO; “Companies were less satisfied with current business, while their expectations clouded noticeably. Prospects for an economic recovery have suffered a setback.”

The German PMI services-sector index strengthened according to the latest PMI data, but the IFO commented on the sector; “Expectations have grown markedly more pessimistic, and the indicator fell to its lowest level since February.”

Rabobank noted that PMI business confidence data on Tuesday reported a decline in export orders which will be a headwind for the economy.

It added; “In summary, European growth will probably remain sluggish in the coming quarters.”

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TAGS: Pound Euro Forecasts

• GBP/USD holds comfortably above 1.3400 in the European session on Monday.
• The renewed US Dollar weakness helps the pair stretch higher.
• Market participant will keep a close eye on political developments in the US.

GBP/USD builds on Friday’s gains and trades in positive territory comfortably above 1.3400 in the European morning on Monday. The pair’s technical outlook is yet to point to a bullish reversal in the short term.

The US Dollar (USD) struggles to find demand at the beginning of the week as the deadline for the US government shutdown looms.

United States (US) President Donald Trump will meet with top congressional leaders from both parties later in the day to finalize a funding deal and avoid a shutdown. Senate Minority Leader Chuck Schumer reportedly demands the funding bill to contain an extension of the enhanced Affordable Care Act premium subsidies to get his party’s support to pass the spending package.

In the absence of high-impact macroeconomic data releases, investors will scrutinize political developments in the US. In case markets grow optimistic about lawmakers funding the government beyond September 30, the USD could stage a rebound and cause GBP/USD to lose its traction. Conversely, the USD could stay under bearish pressure if no deal is reached moving towards the deadline.

On Tuesday, the UK’s Office for National Statistics will publish a revision to the second-quarter Gross Domestic Product (GDP) growth data.

GBP/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart stays slightly above 50, while GBP/USD continues to trade below the 100-period and the 200-period Simple Moving Averages (SMAs). Additionally, GBP/USD stays below the 20-day, 50-day and 100-day SMAs, reflecting a lack of bullish momentum.

On the downside, the first support area could be spotted at 1.3410-1.3400 (Fibonacci 50% retracement of the latest uptrend, round level) ahead of 1.3330 (static level) and 1.3300 (round level). Looking north, resistance levels could be seen at 1.3470-1.3475 (50-day SMA, Fibonacci 38.2% retracement), 1.3490-1.3500 (100-day SMA, 20-day SMA, 200-period SMA) and 1.3550 (Fibonacci 23.6% retracement).

• EUR/USD clings to small gains, trades above 1.1700 early Monday.
• The US Dollar struggles to find demand on growing fears over a government shutdown.
• The near-term technical outlook points to a loss of bearish momentum.

EUR/USD holds its ground and clings to modest gains above 1.1700 early Monday after closing the previous week in negative territory.

The renewed selling pressure surrounding the US Dollar (USD) helps EUR/USD gain traction in the European morning as investors grow increasingly concerned over a government shutdown in the US.

United States (US) President Donald Trump will meet with top congressional leaders from both parties later in the day to enact the funding legislation to avoid a shutdown ahead of the Tuesday midnight deadline.

Market participants are also worried that the Bureau of Labor Statistics (BLS) might not be able to release the September employment report, which will include key Nonfarm Payrolls (NFP) and Unemployment Rate figures that the Federal Reserve (Fed) looks at while taking policy steps, this Friday if the government shutdowns midweek.

The US economic calendar will feature Pending Home Sales data for August later in the day, which is unlikely to trigger a significant market reaction. Investors will keep a close eye on the political developments in the US. In case Congress strikes a funding deal, the USD could stage a rebound and make it difficult for EUR/USD to extend its recovery.

EUR/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart moves sideways near 50 in the European session, reflecting a neutral stance.

EUR/USD faces a pivot level at 1.1690-1.1700 (200-period Simple Moving Average (SMA), Fibonacci 38.2% retracement of the latest uptrend). In case the pair continues to use this level as support, technical buyers could remain interested. In this scenario, 1.1750 (100-period SMA), 1.1770 (Fibonacci 23.6% retracement) and 1.1820 (static level) could be seen as next resistance levels.

If EUR/USD fails to stabilize above 1.1690-1.1700, sellers could take action. On the downside, support levels could be spotted at 1.1640 (Fibonacci 50% retracement) and 1.1580 (Fibonacci 61.8% retracement).

Copper price began today’s trading with positive action, attempting to renew the pressure on the barrier at $4.7500, to find an exit for resuming the main bullish attack, to expect targeting $4.9500 level reaching the main target at $5.3100.

Note that the continuation of forming extra support by the moving average 55 stability near $4.3700, besides stochastic attempt to provide bullish momentum, these factors support the bullish suggestion, to keep waiting for achieving the suggested targets.

The expected trading range for today is $4.5500 and $4.9500

Trend forecast: Bullish

The EURJPY pair didn’t succeed in reaching the extra positive stations, affected by its neediness to the positive momentum, which forces it to settle below the barrier at 175.20, forming correctional waves by its stability near 174.65.

We expect providing mixed trading due to stochastic attempt to exit the overbought level, but it didn’t affect the main bullish trend, due to the stability of the trading within the bullish channel levels, by forming 173.45 level as an important extra support, therefore, we recommend waiting for breaching the barrier, to open the way for reaching extra positive stations, that are located near 176.00 reaching 176.95.

The expected trading range for today is between 174.20 and 175.20

Trend forecast: Sideways 

– Written by


Ben Hughes

STORY LINK Euro to Dollar Forecast: Oversold EUR/USD Tests Crucial Support

The Euro-to-Dollar exchange rate slipped to three-week lows on Thursday, with EUR/USD testing support near 1.1650 after stronger-than-expected US data boosted the greenback.

Markets scaled back Fed cut bets, while analysts warned that a break of the 50-day moving average at 1.1660 could open the door to deeper losses.

ING, however, still sees scope for EUR/USD to rebound above 1.170 in the short term.

EUR/USD Forecasts: Slides to 3-Week Lows

The Euro to Dollar (EUR/USD) exchange rate was unable to make headway on Thursday and dipped to 3-week lows just below 1.1650 before a tentative recovery to 1.1680 on Friday.

The US data releases on Thursday were stronger than expected with no sign of an increase in layoffs which helped underpin the dollar.

There was a shift in market pricing with traders considering that the chances of two further Fed rate cuts by the end of 2025 had dipped towards 60%.

According to UoB; “While the decline is deeply oversold, there is no sign of stabilisation just yet. Today, as long as EUR holds below 1.1715, there is a chance for EUR to continue to decline. That said, the major support at 1.1610 is likely out of reach for now.”

SocGen considers that the dollar is around key support; “The pair is currently testing an ascending trend line established since August; the 50-day moving average near 1.1660 is a crucial support.”

It added; “Should it fail to defend the moving average near 1.1660, the down move may extend. In such a scenario, the next objectives could be located at the late August lows of 1.1600/1.1570 and 1.1500.”

ING is doubtful that the dollar can hold recent gains; “our baseline view is for the dollar to give back some gains, and we think a return above 1.170 can happen as early as today.”

It did note potential further Euro setbacks; “One risk, aside from any more US data strength, is that markets take rising geopolitical tension in Europe more seriously. NATO said yesterday that it is ready to shoot down any Russian planes violating its airspace.”

MUFG noted that the US data was stronger than expected; “It’s been some time since US data has surprised to the upside and driven both yields and the US dollar higher but the data yesterday and on Wednesday certainly did surprise to the upside and given positioning has been so skewed of late toward weakening economic data in the US we have seen a notable rebound for the dollar just when volatility is hitting new lows in FX and bonds.”

The bank expects that the labour market will be crucial for developments.

MUFG added; “If the labour market data was to prove better than expected next week, it would certainly undermine the primary argument put forward by Fed Chair Powell to cut rates further and force the Fed to give more weight to the upside inflation risks.”

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TAGS: Euro Dollar Forecasts