Foreign Exchange Rates : Currency Predictions - GBP, USD, EUR, AUD, CHF

August 3, 2011 - Written by John Cameron

STORY LINK Foreign Exchange Rates : Currency Predictions - GBP, USD, EUR, AUD, CHF

POUND STERLING

The majority of the UK’s economic activity takes place in the services sector, so this morning’s PMI services survey for July, which showed that this key sector is expanding at its fastest rate since March, was very good news for the Pound. Tomorrow’s Bank of England monetary policy announcement is likely to be less Sterling-positive. NEAR-TERM OUTLOOK – NEUTRAL.


US DOLLAR – The Pound Dollar exchange rate (GBP/USD) is 1.6392

The Dollar has given up a significant slice of yesterday’s gains so far today, as the Greenback ‘relief rally’ following the raising of the US’s debt ceiling runs out of steam. However, with global equities markets losing significant ground over the last 48 hours and the safe-haven Swiss Franc out of favour, there is potential for renewed Dollar strength in coming sessions. NEAR-TERM OUTLOOK – NEUTRAL TO POSITIVE.


EURO – The Pound Euro exchange rate (GBP/EUR) is 1.1444

The differential between German 10 year bond yields and Italian 10 year yields reached a new record high of 77 basis points earlier in today’s session. Fears over Italy’s creditworthiness have been stoked by a meeting between Italy’s Finance Minister and Jean-Claude Juncker, the leader of the Eurogroup finance ministers. The Eurozone Soverign debt crisis appears to be a long way from being resolved. NEAR-TERM OUTLOOK – NEUTRAL TO NEGATIVE.


AUSTRALIAN DOLLAR – The Pound Australian Dollar exchange rate (GBP/AUD) is 1.5235

The Australian Dollar has endured a poor 24 hours on the market, stoked by last night’s release of June’s Australian Retail Sales figures, which showed a surprise monthly contraction in shop sales. With any tightening of monetary policy by the Reserve Bank of Australia seemingly a long way off and global equities tumbling, further downside is possible for the risk-sensitive Aussie. NEAR-TERM OUTLOOK – NEUTRAL TO NEGATIVE.


SWISS FRANC – The Pound Swiss Franc exchange rate (GBP/CHF) is 1.2670

The Swiss National Bank shocked the markets when it announced earlier today that it is acting to narrow the target range for the Swiss LIBOR rate from 0.00-0.75% down to 0.00-0.25%. This easing of monetary policy has seen a dramatic move against the Franc in the markets, pushing the GBP CHF rate up by almost 4c at one point, before pulling back slightly. NEAR-TERM OUTLOOK – NEUTRAL TO NEGATIVE.


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