Foreign Exchange Rate Forecasts: Pound Sterling, Euro, New Zealand & US Dollar

Modified: Tuesday, 15 October 2013 16:50 BST - Written by John Cameron

STORY LINK Foreign Exchange Rate Forecasts: Pound Sterling, Euro, New Zealand & US Dollar

The POUND STERLING’s performance in the currency market yesterday was no more than moderate. No UK tier one data releases ensured a day of drift, but this is likely to change in a short time when September UK CPI Inflation numbers are published. A showing of greater than the expected 2.6% will cause investors to up their bets on a medium term rate hike from the Bank of England. The outlook for the Pound in the meantime is NEUTRAL.

A slightly better than anticipated print for yesterday morning’s August whole of eurozone Industrial Production figure ensured that the EURO held on to its gains of last week against the Pound. The GBP EUR exchange rate ended the day at 1.1770 as investors expressed their approval for the positive European factory output number. Recent gains for the single currency against Sterling will be tested later today when the latest German ZEW Confidence survey is released. In the lead-up to this print, the euro is forecast to trade on a NEUTRAL TO POSITIVE footing.

The US DOLLAR continued to edge forward against the Pound yesterday, sending the GBP USD exchange rate down to as low as 1.5956. Although recent days have brought reconciliatory noises between Republican and Democrat lawmakers, the fact remains that no debt deal has been agreed and the US remains on the precipice of a catastrophic debt default. With most analysts expecting an accord to be reached, the Greenback is expected to trade with a NEUTRAL TO POSITIVE bias moving forward.

The NEW ZEALAND DOLLAR continues to be well supported in the global currency markets as institutional investors remain unphased by the ongoing US debt row. Analysts are expecting a rate rise from the Reserve Bank of New Zealand in the short to medium term – a fact which ensures strong ongoing support for the Kiwi. However, Sunday night’s higher than anticipated Chinese inflation data poses a threat to the New Zealand tender which is now expected to trade on a NEUTRAL TO POSITIVE footing in the near term. The current GBP NZD exchange rate is 1.9095.

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