HK Dollar, Euro and Singapore Dollar FX Exchange Rate Forecasts - Analysts Predict HKD, SGD vs GBP, EUR & USD Gains

October 13, 2014 - Written by John Cameron

STORY LINK HK Dollar, Euro and Singapore Dollar FX Exchange Rate Forecasts - Analysts Predict HKD, SGD vs GBP, EUR & USD Gains

The austere International Monetary Fund (IMF) downgraded its growth forecasts, but here's our take on the forecasts for the Hong Kong Dollar (HKD), Singapore Dollar (SGD) and the euro (EUR), as well as the usual export-driven suspects – the Australian Dollar (AUD), New Zealand Dollar (NZD) and Canadian Dollar (CAD).

Last week’s report from the IMF carried some doom-laden predictions for the Japanese, eurozone and Brazilian economies. Our leading analyst takes a closer look below.

First, let's look at the latest conversion rates today: (13th October 201 09:20 UK)

The Pound to Australian Dollar exchange rate today is converting -0.59 per cent lower at 1.84351 GBP/AUD.
The Pound to Canadian Dollar conversion rate is +0.21 pct higher at 1.80416 GBP/CAD.
The Pound to Euro exchange rate is -0.29 pct lower with a conversion rate of 1 GBP equals 1.26939 EUR.
The Pound to Hong Kong Dollar conversion rate is +0.01 pct higher at 12.48358 GBP/HKD.
The Pound to Singapore Dollar exchange rate is -0.28 pct lower with a conversion rate of 1 GBP equals 2.04540 SGD.

Stabilisation In Chinese GDP Predicted Helping HK Dollar & Singapore Dollar

Stock markets shuddered at the prospect of slower global growth during the second half of last week, as investors took stock of the down-beat report the IMF.

Predictions that Gross Domestic Product growth in China will stabilise at a lower level than has been evident during recent years adds another element of uncertainty to the Asian currencies.

However, a more predictable economic output from China could assist the region’s two leading currencies – namely the Hong Kong Dollar (currency:HKD), Singapore Dollar (currency:SGD).

Steadier Asian growth To Help Local Currencies

Roughly half of the economic activity in Asia happens in China, making it a key component in the performance of the Hong Kong and Singapore Dollars.

However, as Andrew Swan, Asia Fund Manager with Blackrock pointed out last week, the stabilisation in Chinese GDP expansion, may prove to be, ‘a good sign for markets - that's really what we are looking for is a bit more stability in growth as opposed to acceleration of growth’.

He went on to point out that there were a number of reasons that China’s rate of expansion had levelled out, including better rates of global growth and a generalised loosening of monetary policy from administrations within Asia.

Chinese Policy Easing Could Help Aus, NZ and Canadian Dollar

Another factor providing investors with confidence is that China’s leaders have yet to pull the trigger on all of their available policy measures.

If levels of domestic growth continue sliding, then look for the nation’s politburo to introduce large scale credit easing and active intervention on the currency markets in an effort to control any downside move in economic activity.

Such a move would support the commodity-driven Australian Dollar (AUD), New Zealand Dollar (NZD) and Canadian Dollar (CAD).

Euro (EUR) Exchange Rate Forecast To Underperform

The fact that there remains considerable scope for further action on regional monetary policy leaves China and its surrounding area of greater Asian in a strong position in comparison with the eurozone, where the European Central Bank (ECB) has very little ammunition left in its holster.

By its own admission, the ECB is not in a position to cut any of its three key interest rates any further and it has already launched credit easing on a massive scale.

It appears almost inevitable that its targeted Long Term Re-Financing Operations will morph into all-out Quantitative Easing in the form of wide scale purchases of regional sovereign debt in the short term, however past this there is nothing.

For this reason, most analysts forecast that the Pound to euro exchange rate will spike to above the psychologically key 1.3000 GBP EUR threshold sooner rather than later.

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