Foreign Exchange Rates : Currency Predictions - GBP, USD, EUR, AUD, NZD

Published: Monday, 18 July 2011 15:07 BST - Written by John Cameron

STORY LINK Foreign Exchange Rates : Currency Predictions - GBP, USD, EUR, AUD, NZD

POUND STERLING

This morning’s Rightmove House Price survey for July provided investors holding Sterling with further reason for concern, showing that UK house prices are continuing to contract. However, the Pound is holding up well against the Dollar and the Euro thanks to continuing sovereign debt problems in the US and Eurozone. NEAR-TERM OUTLOOK – NEUTRAL.


US DOLLAR – The Pound Dollar exchange rate (GBP/USD) is 1.6073

The Dollar remains in a precarious position, with Republican law-makers continuing to demand swinging cuts in government spending in order to bring the US’s massive national debt under control. With Democrats on Capitol Hill continuing to resist such cuts, something has to give before the US’s 2nd August re-financing deadline. There are possibilities that it will be the Dollar will lose considerable ground as the bickering continues. NEAR-TERM OUTLOOK – NEUTRAL TO NEGATIVE.


EURO – The Pound Euro exchange rate (GBP/EUR) is 1.1433

The market was unimpressed with the results of the European Banking Authority’s latest stress test, which were released on Friday, causing both the EUR GBP and EUR USD rates to trad down on the day. The results showed that only eight of the ninety banks tested failed, against some banking analysts’ expectations that up to fifteen would fail. The result has raised alarm bells with investors, who fear that the EBA has glossed over the structural problems that the Eurozone retail banking sector. NEAR-TERM OUTLOOK – NEUTRAL TO NEGATIVE.


AUSTRALIAN DOLLAR – The Pound Australian Dollar exchange rate (GBP/AUD) is 1.5167


The Australian Dollar suffered some weakness during last night’s Asian session as market participants doubted the veracity of the results of the latest European banking stress test, causing a dip in global appetite for risk. With worries over US policy-makers continuing reluctance to pass legislation raising the US’s debt ceiling and rumours that the Reserve Bank of Australia will resist raising interest rates until November, further downside is possible for the Aussie. NEAR-TERM OUTLOOK – NEUTRAL TO NEGATIVE.


NEW ZEALAND DOLLAR – The Pound New Zealand Dollar exchange rate (GBP/NZD) is 1.9052

Data released overnight showed that New Zealand prices accelerated at a faster rate than analysts had anticipated in the second quarter of 2011. The figures make a near-term rate rise by the Reserve Bank of New Zealand more likely, sending the GBP NZD rate to a new multi-decade low below the 1.90 level. It would seem that this pair has not reached the bottom yet. NEAR-TERM OUTLOOK – NEUTRAL TO POSITIVE.


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