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Gains Forecast for British Pound Sterling Euro Exchange Rate as GBP EUR Hits 6-Year+ High

January 15, 2015 - Written by John Cameron

Pound Sterling Anchored by Inflation Data

The POUND STERLING (currency:GBP) picked up a measure of support during yesterday’s session, largely by dint of the fact that it is not the euro. With no major data releases due out in the UK for the remainder of the week, investors are left to ponder this week’s British inflation numbers which showed that the pace of domestic price rises has fallen to its equal lowest ever level. The prospects of a tightening of its monetary policy from the Bank of England now appear remote, so the outlook for the UK unit is now NEUTRAL.

Euro Slumps on Lawyer’s QE Comments

Support for the EURO (currency:EUR) once again slumped during yesterday’s session following comments from leading EU lawyer Advocate General Cruz Villalon suggesting that all-out Quantitative Easing for the euroland is permissible. A slightly less bad than expected whole of eurozone Industrial Production number, published 24hrs ago, failed to prop up the single currency which is still forecast to trade with a NEGATIVE bias moving forward. The GBP EUR exchange rate stands at 1.2910.

Retail Sales Figures Hit US Dollar

The US DOLLAR (currency:USD) put in a poor performance during yesterday’s afternoon session as market participants priced-in a significantly lower than anticipated set of December US Retail Sales numbers. With almost non-existent increases in real American wages during recent months apparently translating into lower levels of consumer spending, it appears possible that the US economic recovery is stalling, in spite of the strong job creation data throughout 2014. Analysts forecast that the Buck will perform on a NEUTRAL TO POSITIVE footing moving forward and GBP USD sits at 1.5224.

Yen Wins in Safe Haven Hunt

The safe-haven JAPANESE YEN (currency:JPY) was the stand-out performer of the sixteen most actively traded global currencies during yesterday’s trading. The Yen’s low yield status made it an attractive destination for investors looking for a port in the prevailing equities storm and it appears likely that today’s session will bring further gains for the Japanese tender. However, the consensus amongst economists remains that the Yen will perform on a NEUTRAL TO NEGATIVE footing moving forward and GBP JPY stands at 178.110.
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