British Pound Sterling FX Exchange Rate Forecast vs EUR USD CAD

April 27, 2015 - Written by John Cameron

STORY LINK British Pound Sterling FX Exchange Rate Forecast vs EUR USD CAD

Tomorrow’s Q1 Gross Domestic Product figures could be defining for the near-term fortunes of the POUND STERLING (currency:GBP). The final three months of 2014 saw UK economic activity increase by a healthy 0.6%, but analysts are anticipating a lower print from tomorrow’s data. However, the latest growth estimate from the widely-respected NIESR forecast another 0.6% UK GDP increase for the three months to the end of March. The outlook for Sterling is therefore NEUTRAL TO POSITIVE.

The EURO (currency:EUR) dodged a bullet on Friday when the eurogroup of Finance Ministers allowed its 24th April deadline for Greece to produce a comprehensive list of economic reforms to pass without any penalty to Athens. However, judging from comments from the euroland’s policymakers, the mood towards Greece’s left-wing Syriza leadership is hardening. Jeroen Dijsselboem, head of the eurogroup, stated just before the weekend market close that ’big, big, problems’ still need to be overcome before a fresh debt deal for Greece can be reached. Commentators expect the single currency to continue to trade with a NEGATIVE bias moving forward and the GBP EUR exchange rate stands at 1.3975.

Wednesday’s Federal Reserve monetary policy announcement could prove to be a ‘free lunch’ for investors holding the US DOLLAR (currency:USD). The Fed suggested at its last meeting that there is no chance of an interest rate increase this month, so expectations are low. If Fed Chair Janet Yellen hints in her post-announcement press conference that June is the most likely month for a hike, then the Buck will enjoy renewed support. The Greenback is therefore forecast to trade on a NEUTRAL TO POSITIVE footing over the next few days, while the Pound Sterling Dollar exchange rate stands at 1.5170.

The CANADIAN DOLLAR (currency:CAD) has performed strongly against the Pound Sterling during recent weeks. The Loonie has defied expectations that the sharp drop in the global price of crude oil over the last six months would hit it hard. However, renewed losses could be in store for the Canadian unit if Wednesday’s US Federal Reserve policy announcement hints at a near-term interest rate increase in the States. Many analysts now believe that the GBP CAD exchange rate has bottomed-out and the medium-term outlook for the Loonie is NEUTARL TO NEGATIVE. GBP CAD stands at 1.8496.

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