British Pound Sterling Future Currency Forecast: GBP vs EUR USD AUD

February 5, 2016 - Written by James Fuller

STORY LINK British Pound Sterling Future Currency Forecast: GBP vs EUR USD AUD

Pound Sterling Exchange Rate Outlook Neutral to Negative

The POUND STERLING (currency : GBP) was severely hampered yesterday by the dovish tone of the latest Bank of England (BoE) Quarterly Inflation Report.

The suggestion that the pace of British price increases will hold at below the 1.0% level for the remainder of 2016 has dampened investors’ UK interest rate expectations and the outlook for the UK unit is now NEUTRAL TO NEGATIVE.

Euro Exchange Rate Outlook Neutral to Negative

The EURO (currency : EUR) traded into positive territory against the Pound once again yesterday. An encouraging Markit Purchasing Managers Index survey of the German construction sector, out yesterday morning, showed a significant improvement from the previous month’s edition, helping the euro.

However, the potential that the European Central Bank will extend its controversial Quantitative Easing programme next month means that the euro forecast is NEUTRAL TO NEGATIVE. The GBP EUR exchange rate stands at 1.3045.

US Dollar Exchange Rate Outlook Neutral to Negative

Today’s session is forecast to be seminal for the US DOLLAR (currency : USD). The tone of recent data from the States has been downbeat and yesterday’s weekly jobs data came in at well below expectations.

These factors do not bode well for this afternoon’s headline US Non-Farm Payrolls data, so the outlook for the Buck is now NEUTRAL TO NEGATIVE. The Pound US Dollar exchange rate currently stands at 1.4585.

Australian Dollar Exchange Rate Outlook Neutral to Positive

A decided increase in global commodity prices during the past 48hrs has driven a tangible improvement for the export-led AUSTRALIAN DOLLAR (currency : AUD).

The Bloomberg Commodity Index is up by some 5% from its 20th January lows, hinting that there could be further improvement to come for the Aussie.

Australia’s yield advantage appears set to persist into the medium term thanks to investors’ ultra-low rate hike expectations for other global central banks, meaning that the Dollar from Down Under is expected to trade on a NEUTRAL TO POSITIVE footing moving forward. The Pound Aussie exchange rate sits at 2.0178.

Tensions Brewing in the Eurozone over Portuguese Anti-Austerity Budget

Portugal’s new anti-austerity government is already causing tensions after adopting its new budget without approval from the European Commission.

The Portuguese government intends to increase spending in order to stimulate economic growth, taking its deficit in 2016 and 2017 above the 3% limit imposed by the Commission.

The EC could veto the budget, which would be the first time it has ever had to do so, but this could cause an even greater rift to appear. It appears that Portugal will be given until the Spring to make the necessary changes to ensure the budget is compliant.

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