Exchange Rate Outlook Forecast for Majors : GBP, USD, EUR, AUD, NZD, CAD

April 7, 2011 - Written by John Cameron

STORY LINK Exchange Rate Outlook Forecast for Majors : GBP, USD, EUR, AUD, NZD, CAD

POUND STERLING

As expected, the Bank of England Monetary Policy Committee opted to maintain UK interest rates at their record low level of 0.50%. They also announced today that the current Asset Purchase scheme will be limited to its current level of £200Bn. The announcement had little effect on Sterling, as it had already been factored into prices. NEAR-TERM OUTLOOK – NEUTRAL.


US DOLLAR – The Pound Dollar exchange rate (GBP/USD) is 1.6295

The Dollar has struggled to make up any ground on the day and remains perilously close to its recent lows against the Euro and the Pound. Even the slight softening in tone of this week’s Fed Statement has failed to elicit any support for the Dollar. Downward pressure continues to come from rising oil prices and improving risk sentiment. NEAR-TERM OUTLOOK – NEUTRAL TO NEGATIVE.


EURO – The Pound Euro exchange rate (GBP/EUR) is 1.1417

The ECB voted for a 25 basis point rise in its headline rate of interest this afternoon, in one of the most widely-mooted actions ever taken by a Central Bank. The hike failed to strengthen the Euro, because it had almost totally been factored-in. In fact the market’s immediate reaction was to sell the Euro as some investors had been predicting a 50 basis point hike. With Portugal requiring emergency funding to resolve its debt problems, the future does not look as rosy for the single currency. NEAR-TERM OUTLOOK – NEGATIVE.


AUSTRALIAN DOLLAR – The Pound Australian Dollar exchange rate (GBP/AUD) is 1.5628

Figures last night showed that unemployment in Australia is at its lowest level since Q4 of 2008. This pushed the Aussie to a new record high against the Greenback earlier today. For technical reasons, it will be difficult for the Aussie to gain much more ground and if the recent surge in risk sentiment recedes, then downside is possible. NEAR-TERM OUTLOOK – NEUTRAL.


NEW ZEALAND DOLLAR – The Pound New Zealand Dollar exchange rate (GBP/NZD) is 2.1024

The New Zealand Dollar has suffered a softer day on the markets as investors have shifted out of the Kiwi and into the Aussie on encouraging Australian employment data. With no tier one data due for release in New Zealand for the remainder of the week, NZD levels will continue to be determined by support, (or otherwise), for its higher-yielder sister, the Aussie. NEAR-TERM OUTLOOK – NEUTRAL.


CANADIAN DOLLAR – The Pound Canadian Dollar exchange rate (GBP/CAD) is 1.5656

Oil prices remained close to the top of their recent range during today’s session, however the CAD failed to make any more than modest gains against the other majors. With the European Central Bank following the People’s Bank of China’s action of earlier in the week by hiking interest rates, fears over reduced demand for Canada’s black gold have held the CAD back. NEAR-TERM OUTLOOK – NEUTRAL TO POSITIVIVE.

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