Exchange Rate Forecast For Pound Sterling GBP vs EUR USD CHF

December 18, 2014 - Written by John Cameron

STORY LINK Exchange Rate Forecast For Pound Sterling GBP vs EUR USD CHF

Pound Sterling Steadies on UK Wage Increase

Yesterday’s news that average UK earnings including bonuses increased by 1.4% in the three months to the end of October helped prop up the POUND STERLING (currency:GBP) on the day. The Bank of England has stated in recent times that an improvement in real wages in Britain will need to be evidenced before it will consider a domestic interest rate hike. A strong showing from this morning’s UK Retail Sales data will be required to further fuel the Pound’s improvement; in the meantime, the outlook for Sterling is NEUTRAL.

Oil Price Drop Threatens Euro Exchange Rate

Yesterday’s confirmation that November’s rate of inflation in the euroland stood at 0.3% provided some relief for investors holding the EURO (currency:EUR). However, with a barrel of crude once again changing hands below the $60 threshold, December’s regional price rise figure may bring the shock news of regional deflation. This outcome would ramp up calls for the European Central Bank to start buying up sovereign debt – such an action would lead the single currency sharply lower. The euro is expected to trade on a NEGATIVE footing in the near-term and the GBP EUR exchange rate stands at 1.2635.

Gains Forecast for US Dollar

The US DOLLAR (currency:USD) clawed back some of its early week losses against Sterling yesterday, sending the GBP USD exchange rate down to as low as 1.5673. However, the lunchtime news that American inflation had dropped by a greater than anticipated amount during November stopped the Buck’s near term amelioration in its tracks. This afternoon’s weekly jobless numbers will provide investors with further direction ahead of the weekend market shutdown; in the meantime, the Greenback is expected to trade with a NEUTRAL TO POSITIVE bias moving forward. The GBP USD exchange rate stands at 1.5641.

Franc Falls on VIX Drop

The SWISS FRANC (currency:CHF) failed to improve against Sterling during yesterday’s session in spite of a better than anticipated Swiss ZEW Sentiment Survey. A pullback in the VIX ‘Fear Index’ following the New York opening bell meant that the Franc lost some of the safe haven support which it had enjoyed during the early part of the week. If share markets improve further before the weekend and VIX drops again, then the Swiss unit could give up further ground. The outlook for the Franc is NEUTRAL TO NEGATIVE and GBP CHF stands at 1.5157.

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