Pound Lire Exchange Rate Sets New High, Pound Rand Forecast To Break Higher

January 14, 2014 - Written by Tim Boyer

STORY LINK Pound Lire Exchange Rate Sets New High, Pound Rand Forecast To Break Higher

This morning’s British price rise data revealed that the UK government’s headline measure of domestic inflation – the Consumer Price Index - dropped to its target level for the first time since November 2009 last month. The news makes a near-term tightening of its monetary policy by the Bank of England less likely in the eyes of investors – why raise interest rates if the rate of price rises has been brought under control?

The development suppressed Sterling throughout today’s session meaning that the Pound euro exchange rate (GBP/EUR) spent a lot of this morning’s loitering just below the 1.2000 level. A strong eurozone Industrial Production figure for November, which convincingly beat expectations, added to the downside pressure on the pair. Tomorrow morning’s German 2013 Gross Domestic Product data represents the next risk event of note for GBP EUR – a showing of below the expected annualised figure of 0.5% could see the Pound settle back above the psychologically key 1.2000 level versus the euro.

Elsewhere, the Turkish Lira has endured a torrid session in the markets today, propelling the Pound Lira exchange rate (GBP/TRY) to a fresh multi-year high of 3.6114 earlier. The shift out of Lira-denominated assets has been driven by the publication of November’s import / export numbers in Turkey which showed that the troubled nation’s current account deficit had increased significantly.

The South African Rand has been another currency under pressure this week. Rumours regarding potential strikes at the world’s three primary platinum production companies, all of whom are based in South Africa, has brought the Rand to its knees and sent the Pound Rand exchange rate (GBP/ZAR) to new five year highs of close to the 18.0000 level. With a strong uptrend in place for GBP ZAR, further near-term gains would appear to be highly likely with analysts queuing up to forecast a visit to 2008’s Lehman Brothers highs for the pair.

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