Foreign Currency Exchange Rate Outlook For EUR GBP & Predictions For USD, CAD

Published: Thursday, 21 February 2013 14:00 BST - Written by David Woodsmith

STORY LINK Foreign Currency Exchange Rate Outlook For EUR GBP & Predictions For USD, CAD

The POUND STERLING has enjoyed a ‘bounce’ on the day today, following yesterday’s disappointing performance. The move in favour of the UK tender has come in spite of this morning’s British public sector borrowing figure which revealed that the coalition government has borrowed a mammoth £93.8bn so far this financial year. Given this, today’s support for Sterling could prove temporary and the outlook for the Pound remains NEUTRAL TO NEGATIVE.

The EURO has performed meekly since this morning’s release of a disappointing raft of Purchasing managers Index surveys from Germany, France and the whole-of-eurozone. Yesterday’s general strike in Greece has added to the impression that all is not well with the continental European economy. The current GBP EUR exchange rate stands at 1.1569 and the single currency is expected to trade on a NEUTRAL footing ahead of tomorrow’s German GDP data.

The CANADIAN DOLLAR has given up ground against Sterling so far today, sending the GBP CAD exchange rate up to its current level of 1.5548. The ‘Loonie’ has recorded losses ahead of tomorrow afternoon’s key Canadian CPI inflation data, which is expected to reveal a cooling of the annualised rate of price rises in Canada. Anything other than a drop-off in the level of Canadian inflation would be likely to cause investors to up their bets on the chances of a near-term interest rate rise from the Bank of Canada. The converse is also true. The CAD is expected to trade on a NEUTRAL TO NEGATIVE footing ahead of this release.

The US DOLLAR hoovered up strong support during last night’s session, sending the GBP USD exchange rate down to a new 31-month low. Support for the Greenback was triggered by yesterday’s Fed minutes which dropped heavy hints that the US central bank might be about to begin scaling down its controversial QE programme. However, ‘Cable’ has recouped much of the overnight losses and currently trades at 1.5259 and the ‘Buck’ is expected to trade on a NEUTRAL TO POSITIVE footing in the short term.

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