October 27, 2011 - Written by John Cameron
STORY LINK Currency Exchange Rates: Forex predictions - GBP, EUR, USD, AUD, CAD
The Pound has struggled in trade today falling against the majority of majors. A recent spate of bad news has done little to help Sterling and it is hard to see where the next gains will be made. Yesterday the Confederation of British Industry report revealed that industrial output in the UK fell sharply in October with confidence being hit amidst concerns over the sovereign debt crisis in the Eurozone. This posed concerns over the resilience of an already flailing UK economy. There is an ongoing concern that the UK economy could face a double dip recession and there is very little appetite for the Pound at the moment.
NEAR-TERM OUTLOOK – NEUTRAL NEGATIVE
US DOLLAR – The Pound Dollar exchange rate (GBP USD) is 1.6074
The Greenback has continued to lose ground in trade today. Risk appetite is proving to be the fundamental driving force in the market at the moment and we would therefore expect the Dollar to continue to lose ground as the situation in Europe continues to improve .
NEAR-TERM OUTLOOK – NEGATIVE
EURO – The Pound Euro exchange rate (GBP EUR) is 1.1344
The Euro has made gains against almost every major currency in the past 24hrs. Gains are attributable to widespread positive sentiment on the news that some form of resolution has been reached to remedy widespread debt concerns. The exact details are not yet known however we do know that there will be a 50% write down for private bondholders on Greek debt. European banks will also benefit from a substantial recapitalisation package totalling €110 billion. The EFSF rescue fund will also be augmented to sure up concerns of ongoing problems.
NEAR-TERM OUTLOOK – POSITIVE
AUSTRALIAN DOLLAR – The Pound Australian Dollar exchange rate (GBP AUD) is 1.5043
The Aussie has continued to rally as risk sentiment improves in conjunction with positive Eurozone news. It is remarkable how interlinked the currency is with risk appetite and if the situation continues to improve in the Eurozone we might expect to see a move back towards 1.45.
NEAR-TERM OUTLOOK – POSITIVE.
CANADIAN DOLLAR– The Pound Canadian Dollar exchange rate (GBP CAD) is 1.5996
Following the minor Canadian Dollar sell off post this week’s RBC interest rate announcement, the Canadian Dollar has rallied 2% in the past 36 hours. This can be attributable to a pick-up in risk appetite following the good news from the euro-zone. There is widespread good feeling in the market at towards risk on currencies and we might expect these risk associated moves to continue in the short term.
NEAR-TERM OUTLOOK – NEUTRAL TO POSITIVE
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