Exchange Rate Forecasts / Predictions: Pound (GBP), Euro (EUR), Dollar (USD) & Swiss Franc (CHF) May 2014

May 8, 2014 - Written by Ben Hughes

STORY LINK Exchange Rate Forecasts / Predictions: Pound (GBP), Euro (EUR), Dollar (USD) & Swiss Franc (CHF) May 2014

The POUND STERLING has pushed ahead in the global currency markets over the past 24hrs, as investors continue to price-in an improved economic outlook for the UK. This lunchtime’s Bank of England policy announcement is unlikely to knock the Pound off its current positive trajectory – it’s too early for a rate rise and the BoE’s Quantitative Easing programme is well and truly finished – meaning that there’s every chance that Sterling will once again perform well on the day. The UK tender is now forecast to trade on a NEUTRAL TO POSITIVE footing moving forward.

A poor set of German Factory Order data, published yesterday morning, held back the single currency on the day, sending the Pound euro exchange rate up to 1.2202 GBP/EUR. The main event for the euro is the near term is undoubtedly this afternoon’s press conference from European Central Bank President Mario Draghi. Investors holding the euro will be closely monitoring Draghi’s comments concerning Quantitative Easing in the eurozone – if he once again hints that this is a live possibility then look for the euro to perform on a NEUTRAL TO NEGATIVE footing in the near-term.

The US DOLLAR remained friendless in the markets yesterday following cutting comments from Federal Chairperson Janet Yellen. Her assertion that the first interest rate rise in a new US rate-hiking cycle remains a long way off is likely to hinder the Buck for months to come. The Pound US Dollar exchange rate traded up to 1.6986 GBP/USD in response and the Greenback is expected to trade on a NEUTRAL TO NEGATIVE footing moving forward.

The SWISS FRANC traded steadily against the other majors during yesterday’s session. The CHF has been considered a safe-haven currency for many years, but has lost some of its lustre in this department since the Swiss National Bank adopted its minimum floor policy for EUR/CHF two years ago. However, support for the Franc since the Ukraine crisis broke suggests that a rump of investors are still willing to use it as a reserve currency. The outlook for the Swiss unit is therefore NEUTRAL TO POSITIVE and the Pound Franc exchange rate stands at 1.4853.

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