British Pound Sterling Foreign Currency Exchange Rate Forecast Against Euro, US Dollar & Japanese Yen

May 18, 2015 - Written by John Cameron

STORY LINK British Pound Sterling Foreign Currency Exchange Rate Forecast Against Euro, US Dollar & Japanese Yen

Last week was a strong one for the POUND STERLING (currency:GBP), but this week could prove to be a test for the UK unit. Tomorrow morning’s local Consumer Price Index inflation data has the potential to be seminal – analysts are forecasting another showing of zero per cent for the headline annualised figure – anything North of this and Sterling wins. The outlook for the Pound is NEUTRAL TO NEGATIVE.

The EURO (currency:EUR) picked up support against both the Pound and the US Dollar as last week’s session drew to a close. However, the shift in favour of the shared unit was mostly driven by a weakening of the other two majors. Greek Prime Minister Alexis Tsipris’ assertion at the end of last week that he will be stringently keeping to his ’red lines’ of no cuts to public sector pay or pensions during his negotiations with the EU / ECB / IMF ‘Troika’ means that the single currency may struggle for weeks to come. The euro is forecast to trade on a NEGATIVE footing moving forward and GBP EUR sits at 1.3745.

The US DOLLAR (currency:USD) has been heavily sold-off against the other sixteen most actively traded global currencies since the publication of a highly disappointing set of domestic jobs data at the start of last month. The news caused analysts to push back their expectations regarding the timing of a US interest rate hike and the Buck suffered as a result. The Buck desperately needs Friday’s US inflation data to show at above the annualised -0.2% which is anticipated; in the meantime, expect the Greenback to perform on a NEUTRAL TO NEGATIVE footing. GBP USD stands at 1.5728.

Support for the JAPANESE YEN (currency:JPY) has slumped during the past two weeks, sending the GBP JPY exchange rate up to close to the 190.000 threshold. Continued suspicions that the Bank of Japan is more determined than any other major global central bank to weaken its tender are likely to hold back the Yen for months, if not years, to come. Wednesday’s Q1 Japanese Gross Domestic Product data is expected to show a marginal improvement on Q4 2014’s counterpart showing, but any softening of the quarterly number will hit the Yen hard as investors factor in the likelihood of further policy loosening from the BoJ. The Pound Sterling Yen exchange rate stands at 187.710 and the outlook for the Japanese tender is NEUTRAL TO NEGATIVE.

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