Exchange Rates Forecasts / Predictions: Pound Sterling (GBP), Euro (EUR), US Dollar (USD), New Zealand Dollar (NZD)

Modified: Monday, 16 December 2013 16:46 BST - Written by John Cameron

STORY LINK Exchange Rates Forecasts / Predictions: Pound Sterling (GBP), Euro (EUR), US Dollar (USD), New Zealand Dollar (NZD)

The POUND STERLING (currency:GBP) is ending the year with a whimper rather than a bang. The Pound was solidly supported during the middle part of the year as investors expressed their relief that the UK economy had avoided a triple dip recession. This relief rally now appears to have run its course and Sterling is in need of some strong UK jobs data in Q1 2014 in order to stoke market rumours regarding a Bank of England interest rate rise. In the meantime the outlook for the Pound is NEUTRAL TO NEGATIVE.

The EURO (currency:EUR) has pushed ahead against Sterling once again today, sending the Pound euro exchange rate (GBP/EUR) down to as low as 1.1824. The single currency has benefitted from this morning’s strong German manufacturing and whole of eurozone Purchasing Manager Index surveys. If tomorrow’s German ZEW index also provides grounds for encouragement, then look for GBP EUR to continue to fall back towards the 1.1700 level. The outlook for the euro is NEUTRAL TO POSITIVE.

The short-to-medium term fortunes of the US DOLLAR (currency:USD) hinge on Wednesday night’s Federal Reserve FOMC policy decision. The consensus view amongst analysts is that the Fed will maintain its Quantitative Easing programme at its current rate of $85bn per month into next year. If the Fed goes against this and cuts QE then look out for a pronounced move lower for GBP USD. The Greenback is likely to continue to trade on a NEUTRAL TO POSITIVE footing in the near-term and the GBP USD exchange rate currently stands at 1.6321.

A slightly disappointing set of Chinese manufacturing figures, released during last night’s Asian session, has held back the New Zealand Dollar (currency:NZD) so far today allowing the Pound NEW ZEALAND DOLAR exchange rate to drift upwards to as high as 1.9798 earlier. The Kiwi continues to suffer from the Reserve Bank of New Zealand Governor Graeme Wheeler’s confirmation earlier in the year that his Bank had intervened in the currency market to actively weaken its domestic currency. The Kiwi is forecast to trade with a NEUTRAL TO POSITIVE bias in the near term.

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