Current Currency Forecast for Euro (EUR), British Pound Sterling (GBP), South African Rand (ZAR) and US Dollar (USD)

February 1, 2016 - Written by David Woodsmith

STORY LINK Current Currency Forecast for Euro (EUR), British Pound Sterling (GBP), South African Rand (ZAR) and US Dollar (USD)

Euro (EUR) Exchange Rate Outlook Neutral to Negative

The EURO (currency : EUR) was buoyed by Friday’s news that the French economy grew at its fastest pace for four years during 2015.

France’s Finance Minister Michel Sapin described last year as the ‘year of recovery’ and forecast that domestic GDP expansion would gain traction this year.

The shared currency needs France’s economy to be firing, but in the short term, last week’s confirmation that euroland inflation had increased to 0.4% helped. The outlook for the euroland unit is NEUTRAL TO POSITIVE.

Pound Sterling (GBP) Exchange Rate Outlook Neutral to Negative

The POUND STERLING (currency : GBP) forecast remains anchored by several factors.

UK inflation stands at a year-on-year 0.2% as of December, and the sharp drop in global oil prices last month means that the pace of British price rises is expected to fall further still. Bank of England interest rate expectations are therefore at rock bottom, but the primary threat to Sterling remains the live possibility that Britain will vote to exit the European Union this year. Whether the proposed deal submitted by Donald Tusk to the EU leaders contains strong enough measures to sway EU dissenters remains to be seen, as is has been revealed that David Cameron will not be allowed to suspend in-work benefits for migrants completely. The Pound is forecast to trade on a NEUTRAL TO NEGATIVE footing moving forward.

South African Rand (ZAR) Exchange Rate Outlook Neutral to Positive

The SOUTH AFRICAN RAND (currency : ZAR) has endured a torrid few months, slumping to its weakest level in living memory against the Pound as investors’ concern regarding President Jacob Zuma’s ability to marshal the local economy increased.

However, last Thursday’s announcement from South African Reserve Bank (SARB) Governor Lesetja Kganyago that his Bank was ramping up its headline interest rate by a hefty 50 basis points triggered a comeback for the Rand. The South African economy’s pronounced yield advantage means that the Rand is now forecast to trade on a NEUTRAL TO POSITIVE footing moving forward. The Sterling Rand exchange stands at 22.6100 GBP ZAR.

US Dollar (USD) Exchange Rate Outlook Neutral to Negative

Friday’s US Gross Domestic Product data, which revealed a sharp drop in activity levels during the final three months of last year, threatens the near-term prospects of the US DOLLAR (currency : USD).

Technical factors may also count against the Greenback this week – the Dollar has made strong gains across the board during the past two months, so may now be due a correction. The outlook for the Buck is now NEUTRAL TO NEGATIVE and the GBP USD exchange rate stands at 1.4240.

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TAGS: American Dollar Forecasts Euro Forecasts Pound Sterling Forecasts South Afric Forecasts