Exchange Rate Forecasts: Pound Sterling, Euro and New Zealand Dollar

December 11, 2014 - Written by John Cameron

STORY LINK Exchange Rate Forecasts: Pound Sterling, Euro and New Zealand Dollar

Latest Forex Forecasts and News for the Pound Euro and NZ Dollar Exchange Rates

The early part of today’s session in the markets has been marked by further sustained losses for equities investors.

London’s benchmark FTSE 100 index tumbled by almost 1% during the morning session, while Europe’s bourses also gave up a significant amount of ground.

New Zealand Dollar Climbs in Spite of Share Losses

Ordinarily, the shift out of risk would be expected to hurt the export-driven New Zealand Dollar, however the Pound Sterling New Zealand Dollar exchange rate slumped back down to below the two to one threshold during the middle part of European trading. The move in favour of the Kiwi followed last night’s policy announcement from the Reserve Bank of New Zealand (RBNZ); as expected, the Kiwi central bank opted to maintain its key interest rate at its current level of 3.50%.

Wheeler’s Words Help Kiwi Forecast

However, it was the accompanying comments from RBNZ Governor Graeme Wheeler which saw support for the New Zealand Dollar soar. Investors had been expecting the RBNZ to confirm that it will be continuing with the ‘pause’ in its interest rate hiking cycle, so Wheeler’s assertion that, ‘some further increase in the official cash rate is expected to be required at a later stage,’ took the market by surprise.

Analysts forecast that there could be further near-term losses to come for the Pound Sterling New Zealand Dollar GBP NZD exchange rate into the medium term.

An increase in the RBNZ’s future growth forecasts provided the New Zealand unit with further assistance, leading Cameron Bagrie of ANZ to assess that, ‘from a global perspective, the New Zealand dollar remains an attractive proposition’.

German Inflation Steady

Meanwhile, the Pound Sterling euro exchange rate experienced some turbulence during this morning’s trading. GBP EUR had slumped to as low as 1.2567 by mid-morning as market participants expressed their relief that November’s German CPI inflation data had showed that the pace of price rises in the euroland’s premier economy had remained static.

A fall in the key figure would have sent investors scrambling to extricate themselves from their euro positions. Disaster averted.

Euro Loses on US Shop Sales Data

However, the afternoon session saw the euro give up some of its near term gains against the Pound.

The move was driven by a renewed weakening of the single currency against the US Dollar after the publication of last month’s US Advance Retail Sales data.

The American shop sales numbers revealed an encouraging 0.7% increase from October’s showing and the Greenback climbed as a result.

The attendant drop in the value of the euro manifested itself as a move higher for GBP EUR via arbitrage funding, with the pair tipping the scales at 1.2683 a short time ago.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Currency Predictions Euro Forecasts Euro Pound Forecasts New Zealan Forecasts