GBP USD, GBP AUD & GBP NZD Exchange Rate Forecasts Hang On Bernanke?s Words

Modified: Tuesday, 21 May 2013 19:38 BST - Written by James Fuller

STORY LINK GBP USD, GBP AUD & GBP NZD Exchange Rate Forecasts Hang On Bernanke?s Words

Today’s session promises to be a market-moving day for one currency in particular – the US Dollar. A brace of risk events in North America are set to dominate proceedings, with Federal Reserve Chairman Ben Bernanke’s appearance before the US Congress’s Joint Economic Committee this afternoon set to be closely monitored by currency market participants. Ostensibly, Bernanke’s speech will focus on the condition of the real economy in the States. However, the head of the world’s leading central bank will have his comments picked over by a crowd of analysts looking for any slight nuance which suggests that the Fed is about to begin winding down its controversial Quantitative Easing programme.

Any hint that the unprecedented era of ‘easy money’ which the Fed heralded in the wake of the 2007/8 credit crisis is coming to a close will be likely to trigger a wave of support for the US Dollar. Such a scenario would surely send Cable back down through the 1.5000 level, with the next significant floor to the downside coming at 1.4230. However, the Greenback will not be the only currency to be effected by any such commentary from Bernanke. Relative values of the high-yielding risk-sensitive currencies including the Australian and New Zealand Dollars will also be markedly altered by such words. The Antipodean tenders enjoy a complex relationship with the Fed’s Quantitative Easing scheme. On the one hand, they tend to derive strength from it due to general global asset prices’ dependence on the availability of ready credit to fuel their ongoing price bubble - a fact which benefits AUD and NZD. From this perspective, any hint of a cutting of QE from the Fed later today might serve to send the GBP AUD and GBP NZD exchange rates higher.

However, an indication from Bernanke that his Bank is considering a return to normal monetary policy conditions would send out a signal to the world that the global economy has left its recent deep and painful credit crisis behind could well trigger an improvement in investor sentiment which would see the AUD and NZD supported. Today could be a game-changing day.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: American Dollar Forecasts Australian Dollar Forecasts Daily Currency Forecasts