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Weekly Pound Sterling Exchange Rate Outlook: Volatility Forecast on Fed Decision

September 19, 2016 - Written by Frank Davies

Pound Sterling (GBP) Exchange Rate Drops on BoE Perspective



Towards the close of last week the Pound Sterling to Euro (GBP/EUR) and Pound Sterling to US Dollar (GBP/USD) exchange rates recorded losses in responses to comments from a Bank of England (BoE) official. The inference that the central bank is happy with the recent devaluation in the Pound saw the British currency decline against the majority of its peers.

As a new week of trading gets underway the Pound Euro currency pair is trading in the region of 1.17 while the Pound US Dollar currency pair is trending in the region of 1.30.

Fed Interest Rate Decision Forecast to Drive Pound Sterling, US Dollar, Euro Exchange Rates



But what news is likely to have the most significant impact on Pound Sterling to Euro (GBP EUR), Pound Sterling to US Dollar (GBP USD) exchange rates in the week ahead?

One risk event eclipses all others next week. Our leading data analyst takes a look at the likely highlights from this week’s roster in the below article -

The world’s leading central bank makes its latest monetary policy announcement at 1900hrs UK time on Wednesday evening and analysts are pricing-in a live chance that the Fed will hike the cost of borrowing Stateside for the first time this year, a move which would provide the US Dollar (currency : USD) with a pronounced boost.

Realistically, this is the Fed’s last chance to raise rates until December; it is holding a policy meeting a few days before the Presidential election in November, but any policy change is considered unlikely for that get-together thanks to the perceived desire from the US central bank to maintain its neutrality ahead of the election. For this reason, a decision to ‘hold’ would hurt the Buck.

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RBNZ Announcement Could Inspire Pound New Zealand Dollar (GBP NZD) Movement



In other currency news, the Pound Sterling to New Zealand Dollar (GBP NZD) currency pair could be in line to experience volatility.

Wednesday evening also brings the Reserve Bank of New Zealand’s latest monetary policy announcement; the Kiwi lender of the last resort is expected to keep interest rates on hold at their current level of 2.00% - anything other than this will provoke pronounced price action for the New Zealand Dollar (currency : NZD). Tomorrow’s afternoon session will provide the Kiwi Dollar with further direction thanks to the publication of the fortnightly GlobalDairyTrade auction results. Another increase in Whole Milk Powder (WMP) prices will be required to cause the NZ unit to strengthen.

AUD, NZD, ZAR, CAD Currency Market Shifts Predicted this Week



Other highlights for the week include Wednesday’s Bank of Japan (BoJ) monetary policy announcement – a tangible loosening of policy from Asia’s second most important central bank would favour the Australian Dollar (currency : AUD), New Zealand Dollar (currency : NZD) and South African Rand (currency : ZAR). Meanwhile, Friday’s session will be market-moving for the Canadian Dollar (currency : CAD) thanks to the publication of August’s local inflation numbers.

Influential UK news is in short supply, but global economic events are likely to have a profound impact on Pound Sterling (GBP) exchange rates.

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