Exchange Rate Outlook Forecast for Majors : GBP USD EUR JPY AUD NZD

11 Mar 2011 at 4 PM - Written by John Cameron

STORY LINK Exchange Rate Outlook Forecast for Majors : GBP USD EUR JPY AUD NZD

POUND STERLING

The Pound has come under concerted selling pressure in today’s session. Factory Gate Price data showed that producers’ exposure to inflation is at its greatest for 28 months. This increase is largely attributable to rising global commodities prices, so is unlikely to force the BoE into a tightening of monetary policy any time soon. CML figures which showing a monthly drop in UK mortgage approvals of 28% in January also hurt the Pound. NEAR-TERM OUTLOOK – NEUTRAL TO NEGATIVE.


US DOLLAR – The Pound Dollar exchange rate is 1.6022

The Dollar has powered forward across the board today as it re-confirms its role as the world economy’s safe haven currency of choice. The Libyan crisis, Eurozone sovereign debt fears, escalating tensions in Saudi Arabia and the Japanese earthquake/tsunami have caused a massive flow of funds into the greenback. A test of 1.3600 looks possible for EUR/USD. NEAR-TERM OUTLOOK – POSITIVE.


EURO - The Pound Euro exchange rate is 1.1566

The 17 Eurozone leaders sent out a strong message to the markets this afternoon. Unfortunately for the Euro, that message was, ‘we don’t care about Eurozone sovereign debt problems’, as they chose to shoe-horn their emergency debt summit into a short session late in the day. Most of the meeting was devoted to discussions regarding the Libyan crisis. The debt discussions are now likely to take place at the end of the month, meaning another two weeks of European policy drift. NEAR-TERM OUTLOOK – NEUTRAL TO NEGATIVE.


JAPANESE YEN – The Pound Japanese Yen exchange rate (GBP/JPY) is 131.22

A terrible day for Japan saw a massive earthquake struck the North Eastern part of the country, causing widespread devastation. The quake hit just before 0600hrs GMT, so the full effects were not reflected in the Tokyo stock exchange. However, the Nikkei 225 closed down by almost 2% as risk aversion reigned. Severe downside for equities is expected when Japanese markets open next week. This should see further movement into the safe-haven Yen, which has gained 1.68% on the day against Sterling. NEAR-TERM OUTLOOK – POSITIVE.


AUSTRALIAN DOLLAR – The Pound Australian Dollar exchange rate (GBP/AUD) is 1.5890

Analysts would expect the Australian Dollar to have lost significant ground today following the global dip in appetite for risk and overnight losses for Asian stocks. However, the Aussie has held up surprisingly well, gaining over half a per cent against both the US Dollar and Sterling. In the absence of any tier one data in Australia next week, the Australian Dollar remains susceptible to swings in risk sentiment. However, with the Aussie behaving like a safe-haven currency today, some confidence is warranted. NEAR-TERM OUTLOOK – NEUTRAL TO POSITIVE.


NEW ZEALAND DOLLAR - The Pound New Zealand Dollar exchange rate (GBP/AUD) is 2.1586

The Kiwi Dollar has mirrored the performance of its antipodean cousin, the Australian Dollar, today making gains against the majors during a bout of risk aversion. However, the Kiwi’s status as a risk sensitive currency may have altered this week, as central bank interest rates have now been cut to 2.5%, diluting its position as a high-yielder. From a technical viewpoint, it looks like the Kiwi was oversold in the aftermath of the Christchurch earthquake and is now trending back to its fair value, NEAR-TERM OUTLOOK – NEUTRAL.

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