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

Published: Tuesday, 16 August 2011 14:21 BST - Written by John Cameron

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

POUND STERLING

Official figures released this morning showed that the headline CPU inflation rate rose to 4.4% last month, up 0.2% from the month before. However, the Bank of England have always maintained that inflation would rise before dropping back below the government’s 2.0% target, so the figure failed to shift investors’ UK interest rate expectations, consequently Sterling has barely risen since the release. NEAR-TERM OUTLOOK – NEUTRAL.


US DOLLAR – The Pound Dollar exchange rate (GBP/USD) is 1.6386

After several sessions of losses, the Greenback has had a steady day so far today. With European and UK stocks experiencing losses and North American shares likely to follow suit later in the day, further upside is possible for the Dollar as today’s session progresses. Further upside is possible for the Dollar if global data releases disappoint over the reminder of the week. NEAR-TERM OUTLOOK – NEUTRAL.


EURO – The Pound Euro exchange rate (GBP/EUR) is 1.1380

German GDP growth figures released this morning showed that economic activity in the Eurozone’s powerhouse economy dramatically slowed in the second quarter of 2011. On a more positive note, today’s debt discussions between German Chancellor Angela Merkel and French President Nicolas Sarkozy have re-emphasised that European leaders are determined to tackle Europe’s mounting debt problems. NEAR-TERM OUTLOOK – NEUTRAL TO NEGATIVE.


AUSTRALIAN DOLLAR – The Pound Australian Dollar exchange rate (GBP/AUD) is 1.5674


The Aussie lost a limited amount of ground overnight as the Reserve Bank of Australia released the minutes of its August meeting. The minutes adopted the same dovish tone as June and July’s releases, noting that downside risks had increased over the month leading up to the meeting. However, the negative tone of the RBA’s commentary has failed to cause a pronounced move against the Aussie, as it was always likely that the minutes would be dovish. NEAR-TERM OUTLOOK – NEUTRAL.


NEW TURKISH LIRA – The Pound New Turkish Lira exchange rate (GBP/TRY) is 2.9131

The Pound broke to a multi-year high of 2.9505 against the Lira last week after Turkey’s Central Bank stepped in to cut its headline lending rate from 6.25% to 5.75% at an emergency meeting on 4th August. Turkey’s central bank Governor Erdem Basci stated yesterday that the Lira is undervalued by 5-10% on the currency markets, however the Turkish currency is unlikely to return to fair value until the Eurozone sovereign debt crisis is resolved, due to Turkish banks’ exposure to potentially toxic European debts. NEAR-TERM OUTLOOK – NEGATIVE.


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