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

Modified: Tuesday, 22 October 2013 09:04 BST - Written by John Cameron

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

The following are exchange rate forecasts for the currencies: Euro, Pound, US Dollar & New Zealand Dollar.

The EURO edged forwards against Sterling throughout yesterday’s trading day, sending the GBP EUR exchange rate down to as low as 1.1803 during the latter part of yesterday’s European equities session. The single currency has been behaving in an increasingly risk-sensitive fashion during recent months, so a poor showing from this afternoon’s US jobs data could reverse yesterday’s losses for GBP EUR. The single currency is expected to trade with a NEUTRAL bias in the lead-up to this release.

The POUND STERLING was directionless yesterday, with a complete absence of tier one UK data to send it higher or lower. Tomorrow’s Bank of England minutes are likely to change all this. With the vast majority of investors now discounting any possibility of further Quantitative Easing for the British economy, any suggestion that further asset purchase is a possibility will send Sterling sharply lower. The forecast for Sterling is therefore NEUTRAL TO NEGATIVE.

The US DOLLAR has been heavily under the cosh in the currency markets for some time now. Market participants are expecting the Fed’s Quantitative Easing programme to carry on at its current $85bn per month level in the short-to-medium term. Anything other than a strong showing from this afternoon’s re-scheduled US labour market numbers is likely to see investors increase their bets that QE will remain at $85bn per month until next year. The outlook for the Greenback in the near-term is therefore NEUTRAL TO NEGATIVE.

A general firming of the data coming out of China in recent weeks has proved supportive to the NEW ZEALAND DOLLAR. Buying pressure for the Kiwi could increase this afternoon if the latest US Non-Farm Payrolls data pleases investors. With the prospect of an interest rate hike from the Reserve Bank of New Zealand sooner rather than later, the Kiwi is expected to trade on a NEUTRAL TO POSITIVE footing moving forward. The current GBP NZD exchange rate stands at 1.9075.

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