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

5 Oct 2011 at 5 PM - Written by John Cameron

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

POUND STERLING

Today brought yet more bad news for the Pound as the UK’s Office of National Statistics released the finalised GDP growth figure for quarter two. The figure was downgraded from initial estimates, revealing that British economic activity expanded by only 0.1% in the three months to the end of June. Things could get worse tomorrow if the Bank of England monetary policy committee votes in favour of further quantitative easing. NEAR -TERM OUTLOOK – NEUTRAL TO NEGATIVE.


US DOLLAR – The Pound Dollar exchange rate (GBP/USD) is 1.5425

This afternoon’s US employment data for September outstripped expectations, suggesting that the US labour market may be stabilising following shockingly poor Summertime numbers. This bodes well for Friday’s non-farm payrolls figure; last month’s counterpart figures showed at zero. NEAR-TERM OUTLOOK – NEUTRAL TO POSITIVE.


EURO – The Pound Euro exchange rate (GBP/EUR) is 1.1586

The Euro has had a steady day on the markets following its poor performance at the start of this trading week. This afternoon’s whole-of-Eurozone Retail Sales figures for August showed an annualised contraction of 1%, whilst this morning’s PMI Survey showed that the Eurozone’s services sector is contracting by more than had been expected. Given the soft tone of Eurozone economic data releases this week, it would not be a complete surprise if the ECB abandoned its hawkish stance on inflation and made a surprise interest rate cut. NEAR-TERM OUTLOOK – NEUTRAL TO NEGATIVE.


AUSTRALIAN DOLLAR – The Pound Australian Dollar exchange rate (GBP/AUD) is 1.6054

The Australian Dollar looks to have stabilised in the markets on the day following heavy losses over the past week. The Reserve Bank of Australia’s decision in the early hours of Tuesday morning to maintain interest rates at 4.75% has re-enforced the Aussie’s status as one of the highest of the high-yielding currencies, however this leaves it open to downside pressure if there is further bad news from Greece and Italy. NEAR-TERM OUTLOOK – NEUTRAL.


JAPANESE YEN – The Pound Japanese Yen exchange rate (GBP/JPY) is 118.51

The Yen has been heavily supported in the currency markets over the past two weeks, sending the GBP JPY rate to below the 120.00 level. This move has been caused a wave of safe-haven support for the low-yielding reserve currencies, as investors look to scale back their exposure to risk due to fears over the Eurozone debt crisis. With the Swiss Franc out of favour because of the Swiss National Bank’s attempts to weaken the Franc in the currency markets, the Dollar and Yen have been the flavour of the month. NEAR-TERM OUTLOOK – POSITIVE.


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