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Exchange Rate Predictions for the Pound, Euro, US Dollar and Canadian Dollar

December 15, 2014 - Written by John Cameron

Sterling Forecast to Edge Lower on Inflation Data



gbp eur exchange rateSupport for the POUND STERLING (currency:GBP) has eased across the board during today’s session as investors nervously await tomorrow morning’s UK inflation figures.

The November numbers are expected to show another drop in the year-on-year pace of UK price rises; if the downward move is of a larger magnitude than economists are anticipating, then the Pound drops.

Such an outcome appears a live possibility thanks to the downward move in crude oil prices over the past six weeks, so the near-term outlook for Sterling is therefore NEUTRAL TO NEGATIVE.

Greece Fears Hamper Euro Exchange rate Forecast



The EURO (currency:EUR) has had an evens-stevens sort of day in the markets today. On the upside, talk of the potential for a damaging bout of deflation in the eurozone economy has been somewhat crowded out by analysts’ predictions of a generalised drop in the rate of global price rises thanks to the pronounced dip in crude oil prices during recent weeks.

As ever, it’s all relative. However, the single currency remains very much at risk, with political analysts suggesting that there is a decent chance that a Greek general election may be triggered for the early part of next year.

A victory for a pro-EU party would by no means be guaranteed. The euro is still forecast to perform with a NEGATIVE bias into the medium term and GBP EUR sits at 1.2571.

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USD Forecast: Strong US Data Fuels Dollar Improvement



More strong domestic data has seen the US DOLLAR (currency:USD) trade strongly against Sterling so far today.

US Industrial and Manufacturing Production numbers for last month pointed to another significant increase in activity levels compared to the preceding month.

The development sent the Pound Dollar exchange rate down to an intraday low of 1.5610 a short time ago and the extant downtrend for GBP USD is likely to continue into the medium term thanks to investors’ expectations on US interest rates.

The Buck is forecast to trade on a NEUTRAL TO POSITIVE footing moving forward.

Improvement in Oil Price Helps Canadian Dollar Exchange Rate



The CANADIAN DOLLAR (currency:CAD) has endured a difficult time during the past seven days.

The sharp downward move in the global price of a barrel of crude has weighed heavily on the Loonie, sending the GBP CAD exchange rate up to its highest level for some weeks at 1.8206 earlier.

However, today’s slight move higher for oil prices and the continued firm tone of US data releases is likely to provide a good platform for the Canadian unit to improve against the other major global tenders moving forward.

The outlook for the CAD is therefore NEUTRAL TO POSITIVE and the GBP CAD exchange rate stands at 1.8134.
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