Foreign Currency FX Rate Forecasts for GBP EUR USD

February 12, 2016 - Written by Toni Johnson

STORY LINK Foreign Currency FX Rate Forecasts for GBP EUR USD

Pound Sterling (GBP) Exchange Rate Outlook Neutral to Negative

Our leading analyst takes a look at what this week’s extreme market movements mean for three leading global currencies below –

The POUND STERLING (currency : GBP) continues to be weighed down by deteriorating sentiment regarding the UK economy. The early week UK Trade Balance figures for 2015 were the worst on record and this is expected to hamper Sterling moving forward, leading many analysts to forecast a renewed slowing of domestic Gross Domestic Product growth throughout 2016.

A potential UK exit from the European Union looms like Banquo’s Ghost at the banquet, so the outlook for the Pound is NEUTRAL TO NEGATIVE.

US Dollar (USD) Exchange Rate Outlook Neutral to Positive

Federal Reserve Chair Janet Yellen sent investors into a tailspin earlier in the week when she painted an extremely gloomy picture of the current global financial situation, which was more pessimistic than her previous December assessment.

Up to this point, the Japanese Yen has been the big winner from the safe haven flows which followed Yellen’s comments, with the US DOLLAR (currency : USD) struggling to assert itself in the markets. However, when investors get over the fact that US interest rates will not be heading higher until the end of 2016 at least, the Buck is expected to hoover up some safe haven support of its own.

For this reason, the future prospects for the Greenback are NEUTRAL TO POSITIVE; the GBP USD exchange rate stands at 1.4547.

Euro (EUR) Exchange Rate Outlook Neutral to Negative

The EURO (currency : EUR) has enjoyed strong support against the other 16 major global units during recent days. However, this move forward puts the shared currency in danger of a technical retracement as speculators ‘take profit’.

Looking at the fundamentals, the shared currency also faces problems – next month’s European Central Bank policy announcement could yield further Quantitative Easing, while Portugal’s creditworthiness is coming under increasing scrutiny. The euro is therefore forecast to trade on a NEUTRAL TO NEGATIVE footing moving forward and the GBP EUR exchange rate stands at 1.2910.

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TAGS: American Dollar Forecasts Euro Forecasts Pound Sterling Forecasts