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

Published: Monday, 31 October 2011 16:56 BST - Written by John Cameron

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

POUND STERLING

The Pound has performed steadily on the day, picking up support as investors shifted their funds out of the Yen and Euro. This morning’s UK Mortgage Approval data helped and if tomorrow morning’s Q3 GDP figure shows that the British economy is once again moving forward, Sterling may be in for further gains. NEAR-TERM OUTLOOK – NEUTRAL TO POSITIVE.


US DOLLAR – The Pound Dollar exchange rate (GBP/USD) is 1.6133

The Dollar has held steady on the day. Given the downward movement in global stock markets, investors holding Dollar-denominated investments might have expected better, suggesting that the strong negative correlation between appetite for risk and support for the US Dollar may be on the wane. NEAR-TERM OUTLOOK – NEUTRAL.


EURO – The Pound Euro exchange rate (GBP/EUR) is 1.1582

The day started badly for the Euro, with far weaker-than-anticipated German Retail Sales figures for September. Things got worse, when an Italian bond auction saw Italy being forced to pay the widest spread on its debts since the inception of the Euro. With Chinese policy-makers suggesting that they do not want to buy European bonds, there is potential for the market to turn against Europe’s single currency. NEAR-TERM OUTLOOK – NEGATIVE.


AUSTRALIAN DOLLAR – The Pound Australian Dollar exchange rate (GBP/AUD) is 1.5243


Support for the Australian Dollar has eased throughout the day, as world stock indices have lost ground. With market participants reacting badly to Japan’s self-interested intervention designed to weaken the Yen, there is potential for the Aussie to suffer further losses as the week progresses. Today’s suggestion from the Chinese authorities that they are not minded to help out the Eurozone by buying up European debts, is likely to further diminish global risk appetite. NEAR-TERM OUTLOOK – NEUTRAL TO NEGATIVE.


SOUTH AFRICAN RAND – The Pound South African Rand exchange rate (GBP/ZAR) is 12.7245

The Rand has leaked support on the day, sending the GBP ZAR rate higher by over 2%. This move has largely been caused by a turnaround in global risk sentiment, as investors switch to a ‘risk-off’ mindset. This is particularly harmful to the ultra high-yielding Rand. With the Eurozone’s debt problems very far from being resolved, the next few sessions could be difficult for the Rand. NEAR-TERM OUTLOOK – NEGATIVE.


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