Analysts Forecast Gains For Pound Sterling GBP vs AUD NZD CAD on US Rate Hike Rumours

October 9, 2015 - Written by Toni Johnson

STORY LINK Analysts Forecast Gains For Pound Sterling GBP vs AUD NZD CAD on US Rate Hike Rumours

Pound Sterling Exchange Rate Forecast: GBP Expected to Gain on AUD, NZD, CAD

The Pound Sterling US Dollar exchange rate has jumped since last night’s publication of the minutes of the US Federal Reserve’s September monetary policy meeting. Although the Fed minutes suggested that the apparent economic slowdown in China and the surrounding nations has not ‘materially altered’ the future prospects of the US economy, the assembled members decided that a ‘wait and see approach’ was the best course for Fed policy, at least until their next get-together at the end of this month. Investors took the Fed’s comments as a tacit announcement that the first US interest rate increase in a rate hiking cycle might not now take place until next year and the GBP USD exchange rate spiked to as high as 1.5383 during today’s trading session as a consequence.

US Interest Rates Expected to Remain On Hold: US Dollar Forecast to Soften

Many analysts agree with market participants’ apparent thoughts regarding the likely trajectory of US interest rates, especially given the highly disappointing US job creation figures for September which were published a week ago today. No lesser source than Professor Sung Won Sohn of California State University observed earlier today that, ‘the jobs report makes an October rate hike out of the question, but if we have some strong employment reports before the December meeting, then a case could still be made from a December rate increase’.

Meanwhile, other analysts took a distinctly different tilt at the situation in the States. David McWilliams, writing on the Woodford Investment Management website earlier this week, suggested that the Fed’s decision to increase its key interest rate was not at all linked with the situation in America’s real economy. A noted writer, specialising in the practical application of economic theory, McWilliams observed that, ‘the reason the Fed wants to move off zero has nothing to do with a fear of inflation. It’s because it wants to signal victory over the liquidity trap. It has already defeated inflation. The old inflation battles of our youth are over. Unfortunately, too many central bankers and prominent economists are a product of their education in an age when inflation was the enemy. Today the enemy is ongoing deflation, not rekindled inflation. Moving off zero for the Fed now is not about inflation – it is about equity and bubble risk.’

Currency Market Predictions: GBP to Australian Dollar, New Zealand Dollar Forecast to Surge

Whatever the Fed’s reasons for tightening its monetary policy, when the inevitable US interest rate hike comes, analysts universally forecast that the upshot will see the Pound Sterling jump against the Australian Dollar (currency : AUD), New Zealand Dollar (currency : NZD) and Canadian Dollar (currency : CAD).

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