Pound Sterling (GBP) Foreign Currency Forecast vs USD EUR CAD

January 13, 2016 - Written by Ben Hughes

STORY LINK Pound Sterling (GBP) Foreign Currency Forecast vs USD EUR CAD

Pound Sterling (GBP) Exchange Rate on Neutral/Negative Footing

The POUND STERLING (currency : GBP) has struggled to make any headway against the other major global tenders following UK Chancellor of the Exchequer George Osborne’s recent assertion that the domestic economy faces multiple threats. While global oil prices remain at multi-year lows, any Bank of England interest rate increase is off the table and the Pound is forecast to trade on a NEUTRAL TO NEGATIVE footing in the short term.

US Dollar on Positive Bias Moving Forward: GBP/USD at over 5-Year Low

The US DOLLAR (currency : USD) has been the star performer in the global currency markets since the turn of the year. The Greenback has strongly benefitted from the US Federal Reserve’s pre-Christmas interest rate hike and last week’s go-ahead American jobs figures have convinced investors that it will not now be a case of ‘one and done’ for US rates. The Fed’s monetary policy appears years ahead of the curve and the Buck is forecast to trade with a NEUTRAL TO POSITIVE bias moving forward. The GBP USD exchange rate stands at 1.4420.

FX News: Euro (EUR) Firming VS GBP, USD Exchange Rates

The EURO (currency : EUR) has firmed against both the Pound and the Dollar during the past month. In the lead-up to last month’s European Central Bank (ECB) policy decision, the market still fully believed ECB President Mario Draghi’s promise to do ‘whatever it takes’ to re-ignite mainland Europe’s economy. However, his Bank’s failure to increase the €60bn per month allocated to its Quantitative Easing programme led analysts to surmise that Germany forced Draghi to rein in his dovish tendencies. The outlook for the shared currency is now NEUTRAL and the GBP EUR exchange rate stands at 1.3350.

Canadian Dollar (CAD) Suffering From Downward Pressure as Oil Prices Fall

The CANADIAN DOLLAR (currency : CAD) continues to suffer downside pressure thanks to the sharp shift lower in global oil prices over the past 18 months. Yesterday’s move to a fresh 11 ½ year low for the price of a barrel of crude piled further pressure on the Loonie and Standard Chartered’s forecast that oil prices could slump to $10 a barrel are likely to maintain this pressure in the near-term. However, Canadian inflation remains relatively high in comparison to that of other developed nations, so any recovery for oil could bring a renewed flood of support for the Canadian unit. In the meantime, the Loonie is predicted to trade on a NEUTRAL TO NEGATIVE footing and the Pound Canadian Dollar exchange rate stands at 2.0591.

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