PREDICTIONS: Pound to Euro Forecasted Volatility, Pound to Dollar Predicted to Move On Jackson Hole Symposium

August 21, 2014 - Written by John Cameron

STORY LINK PREDICTIONS: Pound to Euro Forecasted Volatility, Pound to Dollar Predicted to Move On Jackson Hole Symposium

Currency News UK: Currency analysts are forecasting that a meeting of central bankers could affect the levels of the Pound to euro (GBP/EUR) and Pound to Dollar (GBP/USD) exchange rates moving forward.

The Jackson Hole economic symposium, hosted by the Federal Reserve Bank of Kansas City on an annual basis, get under way tomorrow and wraps up on Saturday.

Here's the updated EUR currency rates as of Friday:

- The Euro to Australian Dollar rate is trading down -0.22% at 1.42449 EUR/AUD.
- The Euro to Canadian Dollar exchange rate is trading down -0.04% at 1.45281 EUR/CAD.
- The Euro to Pound exchange rate is trading down -0.06% at 0.80048 EUR/GBP.
- The Euro to Dollar is trading down -0.07% at 1.32691 EUR/USD.

The meeting of global central bankers has earned itself a reputation as a market-moving event during recent years following the dramatic effect which erstwhile US Federal Reserve Chairman Ben Bernanke’s speech at the 2007 edition had on global share markets.

With the current incumbent of the Fed hotseat Janet Yellen penned in to deliver a hotly anticipated speech at 1700hrs BST on Friday and it would appear highly likely that what she says will drastically alter the near-term prospects for the Greenback. Each Jackson Hole meeting is given a grand theme by the organisers – this year, pertinently, it is subtitled ‘Re-Evaluating Labor Market Dynamics.’ If Yellen sticks to the theme, then the US Dollar (currency:USD) may endure further near-term downside.

Last month’s policy statement from the Fed contained a significant alteration to its most recent missives, observing now that the vast American economy is displaying ‘significant underutilization of labor resources’. If the Fed Chair expands on this point, then the likelihood is that the Buck will ship support against the Pound Sterling (currency:GBP) and the euro (currency:EUR). It will be difficult for Yellen to expand on the employment problems which the US faces without investors taking this as a sign that a domestic interest rate hike is still a long way off.

Ethan Harris of Bank of America explained that if Yellen takes, ‘a more careful look at wages would be a good place for her to plough some new ground. They are way too weak, no sign of improvement, and if you’re going to defend why the Fed is going so slowly here, that’s your exhibit A: slow wage growth.’

On a similar vein, Yellen’s speech will be followed shortly after by a set speech from European Central Bank Chief Mario Draghi. It will be a surprise if the top man at the ECB does not allude to a further loosening of the euroland’s monetary policy in an effort to steer the region away from a decimating bout of deflation. Look for the Pound euro exchange rate (GBP EUR) to record further gains if Draghi makes mention of Quantitative Easing for the euro area.

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