Euro, Pound Sterling, Canadian & US Dollar Exchange Rate Forecasts 11/12/2013

Modified: Wednesday, 11 December 2013 16:01 BST - Written by James Fuller

STORY LINK Euro, Pound Sterling, Canadian & US Dollar Exchange Rate Forecasts 11/12/2013

The EURO has bullied Sterling again today, sending the GBP EUR exchange rate down to 1.1883 this morning. This morning’s German Consumer Price Index inflation figures came out bang on expectations, so support for the single currency on the day has derived from future expectations regarding tomorrow morning’s European Central Bank monthly report. Market participants are expecting the ECB to ease back on its recent rhetoric hinting at further cuts to its key lending rate. The euro is expected to trade on a NEUTRAL footing ahead of tomorrow’s publication.

The POUND STERLING has once again lost ground against the majority of the other sixteen most-actively traded global currencies on the day. A complete absence of tier one data releases in the UK has afforded investors the time to reflect on Britain’s current geo-political problems. Next year has the potential to be a poor one for the Pound, should Scotland vote in favour of independence from the UK and the groundswell of public support for a split from the European Union gathers steam. The outlook for Sterling is NEUTRAL TO NEGATIVE.

The CANADIAN DOLLAR has dominated Sterling on the day, sending the GBP CAD exchange rate down to 1.7322 during pre-session trading in New York. The Canadian unit has benefitted from the overnight news that a deal has been reached in Washington regarding the US’s Federal Budget. If tomorrow’s domestic House Price figures reveal that activity is picking up in this key sector of the Canadian economy then GBP CAD has the potential to break back down into the 1.6000s before the year is out. The Loonie is predicted to trade with a NEUTRAL TO POSITIVE bias in the meantime.

The US DOLLAR has firmed up against the other majors so far today, sending the GBP USD exchange rate down to as low as 1.6363 earlier on. Support for the Greenback on the day was driven by last night’s news that a budget deal had been reached in the US Congress which will avert a repeat of October’s Dollar-negative stand-off between Democrat and Republican factions. The recent downshift in GBP USD could signify that the pair has now reached a top, particularly if next week’s Fed policy meeting yields an announcement of a trimming of QE. Analysts now forecast that the Buck will trade on a NEUTRAL TO NEGATIVE footing moving forward.

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