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

Published: Tuesday, 6 September 2011 14:55 BST - Written by John Cameron

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

POUND STERLING

The Pound has been friendless in the currency markets throughout today’s session following the worst PMI Services sector reading for over a decade yesterday. Most of the major moves have been for other currencies on the day, but tomorrow’s UK industrial production figures and Thursday’s NIESR growth estimate may change this. NEAR-TERM OUTLOOK – NEUTRAL TO NEGATIVE.


US DOLLAR – The Pound Dollar exchange rate (GBP/USD) is 1.6027

The Dollar has consolidated the gains that it has made since the start of the week during today’s session. With US stock indices trading down by over 2% during the early part of the North American session, the Greenback is likely to garner further support as the day progresses as investors shift out of equities and into the safe haven of US t-bills. NEAR-TERM OUTLOOK – NEUTRAL TO POSITIVE.


EURO – The Pound Euro exchange rate (GBP/EUR) is 1.1392

The Euro has recovered a significant amount of the ground it lost in the early part of the week during this morning’s session as investors shifted their funds out of the Swiss Franc and into the nearest haven. However, the massive flow of funds into Euro-denominated assets is likely to ease off soon and then market focus will return to the possible spread of contagion from debt-troubled Eurozone states to European retail banks. NEAR-TERM OUTLOOK – NEUTRAL TO POSITIVE.


AUSTRALIAN DOLLAR – The Pound Australian Dollar exchange rate (GBP/AUD) is 1.5204


The Reserve Bank of Australia elected to maintain its key lending rate at 4.75% once again at its overnight policy meeting. The accompanying statement from Australia’s central bank was dovish in tone, predicting that domestic inflation would start easing off towards the end of 2011. The Aussie has avoided pronounced losses as many investors had expected the RBA’s statement to be even more dovish than they turned out to be; a steady performance for European shares has also helped the Australian Dollar today. NEAR-TERM OUTLOOK – NEUTRAL TO NEGATIVE.


SWISS FRANC – The Pound Swiss Franc exchange rate (GBP/CHF) is 1.3695

The Swiss National Bank shocked investors by announcing this morning that it will actively weaken the Swiss Franc in the currency markets by selling Franc-denominated reserves and buying ‘unlimited quantities’ of foreign currency. The SNB have stated that, moving forward, they will not allow the EUR CHF rate to drop below the 1.2000 level. The dramatic move, designed to improve the terms of trade for Swiss exporters, has seen the EUR CHF trade up by over 11.5c at one point during today’s session. NEAR-TERM OUTLOOK – NEGATIVE.


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