Losses Forecast For GBP EUR Exchange Rate, GBP USD Heads Southwards

Modified: Tuesday, 14 May 2013 20:08 BST - Written by David Woodsmith

STORY LINK Losses Forecast For GBP EUR Exchange Rate, GBP USD Heads Southwards

The US Dollar once again market outperformed during yesterday’s session in the global currency markets. By the middle part of yesterday’s North American session, the Pound to US Dollar exchange rate had lost around half a percent of its value and had dipped to 1.5227. This represented the pair’s lowest level for some three weeks.

The Greenback had started the day in good form thanks to Monday’s stronger than expected US Advance Retail Sales data and market rumours that the Federal Reserve is set to begin downsizing its Quantitative Easing programme. However, support for the Buck really started picking up steam when the International Energy Agency (IEA) issued a report predicting that within five years the USA will change from the world’s leading net importer of oil into an oil exporting nation. The dramatic turnaround will be attributable to a sharp increase in the volume of shale oil being extracted via the controversial method of ‘fracking’.

The dramatic news, in combination with the US’s recent withdrawal from Afghanistan and Iraq is likely to see America begin to reduce its massive budget deficit. An additional knock-on effect of the development is likely to be a move in favour of the US Dollar in the global currency market. A near-term target for Cable in such a scenario comes at 1.4831 and the ultimate downside goal for GBP USD is provided by January 2009’s multi-year low of 1.3498.

Looking ahead to today’s session, three key risk events in the data schedule have the capability to alter levels on the Pound to euro exchange rate (currency : GBP EUR). The latest UK Jobless Claims figure leads the way. The April data is expected to show a reduction of 3,000 in the number of British unemployment claimants compared to the month before. Then, at 1000hrs BST, comes the publication of the advance version of the official Eurostat whole of eurozone GDP data for Q1. The key release is expected to reveal that mainland Europe’s economy contracted by 0.9% in the first three months of this year. With expectations as low as this, the potential exists that the key number will come out better than expected. The final risk event of note this morning comes in the form of the latest Bank of England Quarterly Inflation Report. Any sniff of more Quantitative Easing for the UK economy could trigger heavy selling pressure for the Pound.

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TAGS: American Dollar Forecasts Currency Predictions Dollar Poun Forecasts