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

28 Mar 2011 at 4 PM - Written by John Cameron

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

POUND STERLING

Interest rate expectations continue to dog the Pound, with MPC member Adam Posen predicting today that the UK government’s austerity measures will have a ‘meaningful’ cooling effect on price rises. Another MPC member, Andrew Sentance, also spoke today, re-iterating his strongly-hawkish stance on rates. However, Sentance’s comments will be largely discounted by the markets as he is relinquishing his position on the committee after May’s meeting. NEAR-TERM OUTLOOK – NEUTRAL TO NEGATIVE.


EURO – The Pound Euro exchange rate (GBP/EUR) is 1.1355

ECB President Jean Claude Trichet commented earlier today that a Eurozone Rate Hike was a ‘near certainty’ for next week, providing further support for the Euro. However, gains for the single currency were tempered by fears that Friday’s Eurozone debt bailout package is not as water-tight as had been hoped. Analysts fear that the slimmed down fund which will take over from the current EFSF will be unable to shore up the finances of troubled Eurozone nation states. NEAR-TERM OUTLOOK – NEUTRAL TO NEGATIVE.


US DOLLAR – The Pound Dollar exchange rate (GBP/USD) is 1.6019

A mixed day for the Greenback saw some gains in early trading following a poor session for Asian equities. This afternoon’s data releases proved largely positive, with US Personal Spending figures coming out better than expected. US Pending Home Sales figures also came out significantly ahead of expectations. These figures may serve to improve risk sentiment and weaken the Dollar. NEAR-TERM OUTLOOK – NEUTRAL TO NEGATIVE.


AUSTRALIAN DOLLAR – The Pound Australian Dollar exchange rate (GBP/AUD) is 1.5593

Market rumours have abounded today that Australia has seen an influx of inward funds due to insurance payments for damage caused by December’s Queensland floods. These rumours have seen the Australian Dollar gain further support. Institutional investors have heaped further buying pressure on the Aussie on the back of a series of Merger & Acquisition rumours regarding Australian companies. NEAR-TERM OUTLOOK – NEUTRAL TO POSITIVE.


NEW ZEALAND DOLLAR – The Pound New Zealand Dollar exchange rate (GBP/NZD) is 2.1271

Futures markets are predicting that the Reserve Bank of New Zealand will hold interest rates at their present level for the remainder of 2011, following their recent 50bps cut. This is providing much needed support for the Kiwi which lost a great deal of ground as market participants downgraded their NZ interest rate expectations following the Christchurch earthquake. New Zealand manufacturing and trade balance figures could come out significantly ahead of expectations when they are released later today, providing further support. NEAR-TERM OUTLOOK – NEUTRAL TO POSITIVE.


SWISS FRANC – The Pound Swiss Franc exchange rate (GBP/CHF) is 1.4683

The Swissie has been the best-performing of the major economies over the past 12 months, making considerable gains as a safe-haven during bouts of market risk aversion. Some analysts have commented that the Franc is the last remaining genuine ‘safe haven’ currency following the Japanese earthquake and unprecedented levels of indebtedness in the US. The Franc made gains again today following an anaemic day for equities. However, caution is advisable for investors holding Swiss Francs, with Swiss National Bank President Philipp Hildebrand expressing fears that the strong Swissie is hurting domestic exporters. NEAR-TERM OUTLOOK – NEUTRAL.

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