Foreign Exchange Rate Outlook Forecast for Majors : GBP EUR USD AUD NZD CHF

May 10, 2011 - Written by John Cameron

STORY LINK Foreign Exchange Rate Outlook Forecast for Majors : GBP EUR USD AUD NZD CHF

POUND STERLING

Sterling traded within tight ranges against the other majors on the day, in the absence of any tier one data. Tomorrow’s Bank of England Quarterly Inflation Report will be closely watched and it is likely that BoE Governor Mervyn King will trot out his usual dovish message on the UK economy. NEAR-TERM OUTLOOK – NEUTRAL TO NEGATIVE.


US DOLLAR – The Pound Dollar exchange rate (GBP/USD) is 1.6352

The Dollar has continued its push forward against the Pound and the Euro following the recent dip in global appetite for risk and the mixed nature of Friday’s employment figures. However, with last night’s Chinese Trade Figures beating expectations and stock markets moving forwards again, the Dollar gains of the last few trading days may prove short-lived. NEAR-TERM OUTLOOK – NEUTRAL TO NEGATIVE.


EURO – The Pound Euro exchange rate (GBP/EUR) is 1.1394

With little data of note released in the Eurozone today, market participants continued to adjust their Euro positions according to their expectations on how the Eurozone sovereign debt crisis will unfold. ECB Governing Council member Lorenzo Bini Smaghi stated that the mooted re-structuring of Greece’s debt would have a ‘dramatic’ effect on the single currency. Tomorrow morning’s German inflation data may help the Euro. NEAR-TERM OUTLOOK – NEUTRAL TO NEGATIVE.


AUSTRALIAN DOLLAR – The Pound Australian Dollar exchange rate (GBP/AUD) is 1.5153

Australian Trade Balance figures released overnight far exceeded expectations and with strong Chinese trade figures also released during the Asian session, many analysts were surprised that the Aussie did not make up more ground. The limiting factor was the announcement by the Australian government that they are set to cut spending by AUD22bn in order to cut their budget deficit. NEAR-TERM OUTLOOK – NEUTRAL TO POSITIVE.


NEW ZEALAND DOLLAR – The Pound New Zealand Dollar exchange rate (GBP/NZD) is 2.0642

The New Zealand Dollar has been hit hard on the day by an IMF report which stated that, based on projected yields, the Kiwi is overvalued by between 5 and 20% on the currency markets. This caused pronounced selling pressure for the NZD; tomorrow night’s manufacturing sector figure will be the Kiwi’s first real chance of a reprieve. NEAR-TERM OUTLOOK – NEUTRAL TO NEAGTIVE.


SWISS FRANC – The Pound Swiss Franc exchange rate (GBP/CHF) is 1.4364

This morning’s Swiss CPI Inflation figure came in significantly below expectations, leading analysts to downgrade their expectations for Swiss interest rate rises for the next 12 months. Combined with an improvement in the S&P 500 and the FTSE 100, there is a good chance that the Franc will trend downwards for the remainder of the week. NEAR-TERM OUTLOOK – NEGATIVE.

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