Exchange Rate Predictions - Pound Sterling to Euro, US Dollar And New Zealand Dollar Currency Forecasts

Published: Friday, 12 October 2012 15:00 BST - Written by Frank Davies

STORY LINK Exchange Rate Predictions - Pound Sterling to Euro, US Dollar And New Zealand Dollar Currency Forecasts

This afternoon’s US Producer Price Index, considered to be a reliable indicator of future levels of inflation in an economy, printed above expectations at an annualised 2.1%. With domestic price rises showing little sign of abating, the Federal Reserve’s hands look to be tied regarding future increases to its current US$40bn Quantitative Easing Scheme. The GBP USD exchange rate has remained relatively steady on the day and currently trades at 1.6080. However, there may be further upside to come for the pair if this afternoon’s Michigan Sentiment survey disappoints.

Meanwhile, this morning’s whole of eurozone Industrial Production figure came out significantly ‘less bad’ than analysts had been anticipating. This prompted some support for the euro, taking the GBP EUR exchange rate as low as 1.2360 earlier today. However, the single currency has given up some of these gains this afternoon, for technical rather than fundamental reasons. The euro is expected to continue trading with a slightly positive bias in the near-term.

No UK data releases of note today, meaning that comments from Bank of England Deputy Governor Paul Tucker, who spoke in Tokyo earlier today, were particularly closely-watched. Tucker warned the ‘big four’ UK retail banks that if they acted in a way which would necessitate another bailout, the backlash from British taxpayers would be ‘uncontainable’. Sterling has endured another broadly disappointing day following these comments and the British tender remains badly in need of a ‘pick me up’ to snap its current run of losses.

Elsewhere, the New Zealand Dollar has outperformed all of the other majors so far today. Support for the Kiwi has come in spite of a lack of NZ data releases this week. The NZD has benefitted from recent actions from the global economy’s leading central banks – the ECB, Bank of England and Federal Reserve have all ramped up their extraordinary monetary policy measures in recent times, improving investor sentiment and giving commodity-driven risk-sensitive currencies like the NZD a chance to thrive. The current GBP NZD exchange rate stands at 1.9598 and the Kiwi is expected to start next week on a sure-footing.

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