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Pound, Euro and Yen: Exchange Rate Forecasts on Pound Sterling (GBP) vs Euro (EUR) & Japanese Yen (JPY)

September 29, 2014 - Written by John Cameron

The Pound Sterling (currency:GBP) suffered a double blow against the Euro, US Dollar (USD) and Australian Dollar (AUD) yesterday morning, leading analysts to forecast that the UK unit’s bull run may be about to end.

Meanwhile, predictions for the Japanese Yen (currency:JPY) and euro (currency:EUR) remain grim.

Where are the Pound, Euro and Yen Today?

The Pound Sterling to Australian Dollar exchange rate is trading up +0.16% at 1.86200 GBP/AUD.
The Pound Sterling to Canadian Dollar exchange rate is trading down -0.09% at 1.81160 GBP/CAD.
The Pound Sterling to Euro exchange rate is trading down -0.06% at 1.28033 GBP/EUR.
The Pound Sterling to Japanese Yen exchange rate is trading up +0.11% at 177.86233 GBP/JPY.
The Pound Sterling to New Zealand Dollar exchange rate is trading up +1.22% at 2.09062 GBP/NZD.
The Pound Sterling to US Dollar exchange rate is trading up +0.06% at 1.62487 GBP/USD.

A weaker than expected set of August UK Mortgage Approval figures hindered the Pound Sterling’s progress during today’s session. The Bank of England has stated that a central plank of its plan to cool down the overheating British property market is to choke off the flow of funds from domestic mortgage providers to UK borrowers. If today’s numbers are to be believed, their measures are having the desired effect. Analysts had been anticipating a slight drop-off in the number of UK mortgages approved last month from July’s showing of 66,600, however the print of 64,200 pointed to a larger than anticipated decrease. The Pound suffered as a result.

Meanwhile, there was further worrisome news for Sterling-holders this morning when leading credit ratings agency Moody’s announced that it had cut the UK’s AAA credit rating to Aa1. It was the first downgrading of British sovereign debt since 1978, emphasising the structural problems which the UK economy continues to face. Moody’s blamed its decision on the continued high level of Britain’s national debt and questioned the UK’s ability to pay down its commitments, predicting that domestic GDP growth will, ‘remain sluggish over the next few years’.
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Meanwhile the latest data from the US Commodity Futures Trading Commission, published on Friday, revealed that there are two major global currencies which are likely to underperform versus the Pound Sterling into the medium term. The weekly figures, which cover the seven days leading up to the 23rd September, pointed to a marked increase in the level of short contracts held by speculators on both the Japanese Yen (currency:JPY) and the euro (currency:EUR).

It appears that both of these tenders continue to suffer thanks to investors’ expectations that both the European Central Bank and the Bank of Japan are set to take further steps to weaken their local currencies in the near-term. It seems likely that Abenomics is yet to run its full course in Asia’s second economy, while most analysts now feel that an all-out programme of Quantitative Easing represents the next step for the ECB. However, this morning’s slightly higher than anticipated eurozone inflation data makes such an action marginally less likely this side of Christmas.
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