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Foreign Exchange Rate Predictions/Forecasts For GBP EUR NOK USD

November 7, 2013 - Written by Ben Hughes

The POUND STERLING’s near-term fortunes will be determined by this afternoon’s Bank of England policy announcement. Strong UK Industrial and Manufacturing Production figures, published yesterday, added to the positive sentiment towards the Pound which Tuesday’s highly encouraging British services sector data engendered. If the BoE releases a hawkish statement alongside its policy announcement at midday, then Sterling may enjoy further gains. The short term forecast for the Pound is NEUTRAL TO POSITIVE.

Investors holding the EURO will be nervously awaiting this afternoon’s press conference from European Central Bank President Mario Draghi. At his two most recent set-piece Q&A sessions, Draghi has revealed that his Bank’s policy committee discussed a potential interest rate cut. With eurozone inflation data since the last ECB get-together suggesting that the rate of mainland European price rises is cooling dramatically, Draghi may feel that a monetary boost is required. A rate cut or further extraordinary policy measures may be announced later today. For this reason, the short term forecast for the single currency is NEUTRAL TO NEGATIVE and the current GBP EUR exchange rate stands at 1.1890.

The NORWEGIAN KRONE hovered up support against Sterling yesterday, sending the GBP NOK exchange rate down to 9.5620 at one point. However, the warning signs remain for Norway’s economy following a dismal quarterly level of growth of 0.2% during the three months to the end of June. The continued downward drift in global oil prices continues to hamper the Norwegian unit, meaning the NOK is forecast to trade with a NEUTRAL TO NEGATIVE bias moving forward.

The US DOLLAR put in a lacklustre performance against Sterling yesterday, sending the GBP USD exchange rate up to as high as 1.6118. Gains for the pair were partially driven by arbitrage trades which the forward move in the EUR USD exchange rate triggered. However, a strong showing from this afternoon’s domestic Gross Domestic Product and Personal Consumption figures will surely hasten the Federal Reserve’s tapering of QE, favouring the Buck. The outlook for the Greenback is therefore NEUTRAL.
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