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Q3 FX – P3 – Main Pairs
GBP/USD (“Cable”)
Source: CMC Markets, Date: 27 June 2018
Will Cable return to 2018 highs of 1.437 (+8.22%) or fall to August lows of 1.277 (-4%)?
- Cable is in a 2-month downtrend, with falling highs resistance providing a hindrance.
- Relative Strength Index (RSI) and Stochastics are neutral, in a sign of technical “indecision”.
- Trend strength (ADX) has peaked on 1 June and has been weakening since then.
- Cable tested November 2017 support level several times in late June.
- MACD crossed over the signal line at the same time, signalling potential for a bullish reversal.
- Broker consensus is bullish, with 68% of brokers forecasting an upside from current levels.
- Average target rate in the last month’s broker updates is 1% higher than current market.
- Most bullish Q3 forecast from Standard Chartered, projecting a return to April highs, is 1 month old.
- Latest broker updates have been largely stable, with Q3 levels generally in line with current market rates, suggesting that analysts are projecting low GBP/USD volatility in the near term.
Most bullish: Standard Chartered, Target: 1.42, +7% (30 May)
Average target: 1.34, +1%
Most bearish: RBC Capital Markets, Target: 1.27, -4.4% (8 June)
Data sourced from Bloomberg on 25 June, 2018. Please contact us for a full, up to date rundown.
GBP/EUR
Source: CMC Markets, Date: 29 June 2018
Will GBP/EUR return to May 2017 highs of 1.162 (+2.4%) or fall March lows of 1.115 (-2%)?
- GBP/EUR trading in a rising channel since September, with recent trading closer to channel’s floor.
- Stronger EUR (on news of EU leaders coming to an agreement on migration) sending the pair lower.
- In a moderately bearish sign, MACD crossed below signal line on 21 June.
- Broker consensus is overwhelmingly positive, with Bloomberg’s compilation of analyst data over the last 30 days showing that close to 73% of brokers have set a Q3 target rate above current market levels.
- Most bullish and bearish broker updates are close to 1 month old.
- Last week’s Q3 updates from several brokers, including Morgan Stanley, Danske Bank and UniCredit, are averaging closer to 1.139, slightly above current rates.
- This suggests that Q3 2018 could see a continuation of sideways movement for GBP/EUR.
Most bullish: ABN Amro, Target: 1.176, +3.7% (29 May)
Average target: 1.136, +0.1%
Most bearish: Monex Europe, Target: 1.075, -5.2% (31 May)
Data sourced from Bloomberg on 25 June, 2018. Please contact us for a full, up to date rundown.
EUR/USD
Source: CMC Markets, Date: 27 June, 2018
Will EUR/USD return to April highs of 1.241 (+6%) or fall back to May lows of 1.151 (-1.6%)?
- EUR/USD in a 2-month downtrend.
- Pair tested 2018 lows of 1.151 twice, on 29 May and on 21 June.
- Bounce from support in late June
- Upside potential in Q3 is hindered by twin resistance lines: falling highs since mid-April and horizontal support-turned-resistance around 1.184.
- In a bullish signal, however, MACD is trending higher and broken above signal line on 21 June.
- Broker consensus has a positive bias, with two-thirds of analysts suggesting upside from current levels.
- Most bullish Q3 forecast from Prestige Economics sees medium-term rate of 1.26, far above current levels, though reliability is low due to the update being a month old.
- Recent broker update from Morgan Stanley (22 June) sees EUR/USD trading at 1.13 in Q3 2018, below current levels.
Most bullish: Prestige Economics, Target: 1.26, +7.7% (31 May)
Average target: 1.179, +0.8%
Most bearish: Bank Julius Baer, Target: 1.10, -6% (30 May)
Data sourced from Bloomberg on 25 June, 2018. Please contact us for a full, up to date rundown.
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Prepared by Michael van Dulken, Head of Research
