Pound, Aus Dollar, NZ Dollar and Rand Forecasts: Exchange Rate Predictions for GBP, EUR, USD & ZAR

December 17, 2014 - Written by John Cameron

STORY LINK Pound, Aus Dollar, NZ Dollar and Rand Forecasts: Exchange Rate Predictions for GBP, EUR, USD & ZAR

Exchange Rate Forecasts for the Pound Sterling (currency:GBP), Australian Dollar (currency:AUD), New Zealand Dollar (NZD) and Rand (ZAR)

The minutes of December’s Bank of England monetary policy meeting were published earlier today and they have proved to be generally unhelpful to the Pound Sterling (currency:GBP) exchange rate forecast.

Too Early for UK Base Rate Hike

In spite of the fact that two of the nine man committee had once again voted for an interest rate increase, the memos of this month’s UK central bank get-together showed a general firming of the assembled policymakers’ view that it is too early to countenance a hike in Base Rate just yet.

Oil Anchors UK Inflation Expectations

The seven policymakers, including Governor Mark Carney, who once again voted to maintain UK interest rates at their current record low of 0.5%, noted that the plunge in global oil prices during November had decreased the likelihood that Britain would require a tightening of monetary policy any time soon.

The BoE meeting took place during the first week of this month and the price of a barrel of Brent Crude oil has plummeted to its lowest level in five and a half years since then.

The implication of this is that next month’s Bank of England meeting will see even less in the way of forceful argument for a rate hike.

VIX Fear Index Spikes

Elsewhere, the closely-monitored VIX ‘Fear Index’ ended yesterday’s North American session at its highest level since share markets plummeted in mid-October.

The reading of 25.20 means that VIX is now threatening the 31.06 level which it touched on 15th October and with London’s FTSE 100 and the euroland’s bourses both having incurred significant losses so far today, it appears highly likely that VIX will head higher in the near-term.

Avoidance of Russian Capital Controls Helps Risk

The level of VIX would surely have been higher were it not for yesterday afternoon’s news from Russia that the nation’s policymakers had opted not to introduce controls on the flow of capital into and out of the former soviet state.

Notwithstanding this moderately positive development, the risk-driven Australian Dollar (currency:AUD), New Zealand Dollar (currency:NZD) and the South African Rand (currency:ZAR) have still slumped against Sterling on the day.

The GBP AUD exchange rate broke to a fresh 6-year high of 1.9308 earlier before peeling back, while GBP NZD came close to the 2.0400 threshold.

The Rand has been the hardest hit on the session, sending the GBP ZAR exchange rate up to an intraday peak of 18.4740.

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