Pound Sterling FX Forecast against EUR USD AUD

May 14, 2015 - Written by John Cameron

STORY LINK Pound Sterling FX Forecast against EUR USD AUD

The POUND STERLING (currency:GBP) had a Jekyll and Hyde day of it yesterday, initially jumping in value thanks to a stand-out set of jobs numbers, but then falling back to earth when the Bank of England slashed its domestic GDP growth forecasts for 2015, 2016 and 2017. The Pound is likely to suffer in the short-to-medium term as investors factor-in a lower percentage chance that British interest rates will be on the rise anytime soon. The outlook for Sterling is NEUTRAL TO NEGATIVE.

The EURO (currency:EUR) once again defied gravity yesterday and forged ahead against both the Pound and the US Dollar. The threat of an imminent Greek bankruptcy and the European Central Bank’s ongoing Quantitative Easing programme continue to hang over the shared currency, but things could get a whole lot worse for the eurozone if Germany’s vast economy shows signs of faltering. For this reason, yesterday’s below-par German GDP data could heap further pressure on the euro which is still forecast to trade with a NEGATIVE bias moving forward. The GBP EUR exchange rate stands at 1.3840.

The US DOLLAR (currency:USD) endured another horror show in the markets yesterday. This time it was the latest domestic Retail Sales numbers which held back the Buck. Analysts had been expecting them to show at slightly above 0.0%, so the zero result came as a blow to investors holding the Greenback. The main event on the horizon for the Buck is tomorrow afternoon’s Michigan Sentiment Index. Recent economic statistics suggest a generalised lack of confidence in the US economic recovery and if today’s survey re-enforces this impression, then the Dollar is forecast to perform on a NEUTRAL TO NEGATIVE footing. The GBP USD exchange rate stands at 1.5740.

The AUSTRALIAN DOLLAR (currency:AUD) enjoyed strong gains against Sterling yesterday, with the GBP AUD exchange rate plunging by over 1.0% on the session. The Aussie continues to be buoyed by last week’s Reserve Bank of Australia monetary policy statement which dropped heavy hints that its rate-cutting cycle may now be at an end. The Dollar from Down Under remains susceptible to bad news from Greece on its debt negotiations, but that apart, is forecast to trade on a NEUTRAL TO POSITIVE footing moving forward. GBP AUD stands at 1.9410.

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