Exchange Rate Predictions - GBP USD EUR CAD TRY NZD

Modified: Monday, 7 March 2011 16:52 BST - Written by John Cameron

STORY LINK Exchange Rate Predictions - GBP USD EUR CAD TRY NZD

POUND STERLING

The Pound has continued to suffer following last week’s negative housing sector and service sector data. Futures markets are pricing in a 17% chance of a rate rise at Thursday’s BoE rate announcement. The likely outcome is a maintenance of rates at their record 0.5% low. With BoE Governor Mervyn King expected to issue typically dovish public statements tomorrow and on Friday and long-time hawk Andrew Sentanceset to be replaced on the MPC, further downside is possible for Sterling. NEAR-TERM OUTLOOK – NEUTRAL TO NEGATIVE.


EURO

The Pound Euro exchange rate (GBP/EUR) is 1.1596

The Euro’s forward momentum was only briefly stalled when Fitchs downgraded Greece’s credit rating earlier today. The markets are pricing in a rate hike at April’s ECB meeting as a near-certainty. A lack of consensus on sovereign debts at Friday’s ECB Debt Summit could stall the Euro. NEAR-TERM OUTLOOK – NEUTRAL TO POSITIVE.


US DOLLAR

The Pound Dollar exchange rate (GBP/USD) is 1.6208


Positive economic data released in the last week has failed to cause any forward movement for the Dollar. With Brent Crude threatening to re-test its high of September 2008 again, the Dollar remains in a precarious position. NEAR-TERM OUTLOOK – NEGATIVE.


CANADIAN DOLLAR

The Pound Canadian Dollar exchange rate (GBP/CAD) is 1.5786

The Canadian Dollar continues to benefit from rising oil prices. Growth in the Canadian economy is outstripping expectations and other key fundamental indicators are strong. The US economy is showing signs of improvement with the fastest level of growth in its manufacturing sector for almost seven years and unemployment dropping. The US is Canada’s major oil export partner, so the improvement in the US economy is likely to further benefit the CAD. NEAR-TERM OUTLOOK – POSITIVE.


TURKISH LIRA

The Pound Turkish Lira exchange rate (GBP/TRY) is 2.5944

Turkey continues to suffer from its proximity to regions of political unrest in North Africa and the Middle East and currency traders continue to use the Lira as a hedge for the region’s political unrest. The fact that Turkey imports 95% of the crude oil it uses makes it doubly susceptible to the continuing political problems which its neighbours are suffering. Turkish government bond spreads rose to their highest level for ten months as fears persist. NEAR-TERM OUTLOOK – NEGATIVE.


NEW ZEALAND DOLLAR

The Pound New Zealand Dollar exchange rate is 2.2037

The Christchurch earthquake continues to weigh heavily on the New Zealand Dollar, with the total impact being costed at NZ$15bn. The New Zealand Dollar remains vulnerable in the market ahead of the Reserve Bank of New Zealand’s rate decision on Wednesday night UK time. Anything other than a rate cut from the current level of 3.00% will be a major surprise; rumours prevail that the cut may be greater than the standard 25 basis points. NEAR-TERM OUTLOOK – NEGATIVE.

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