Foreign Currency Exchange Rate Forecast For GBP USD AUD CAD

Modified: Wednesday, 18 December 2013 13:05 BST - Written by David Woodsmith

STORY LINK Foreign Currency Exchange Rate Forecast For GBP USD AUD CAD

The POUND STERLING got just what it didn’t need yesterday morning – a lower than anticipated set of November UK Consumer Price Index inflation numbers. With British price rises now apparently well under control, there is little onus on the Bank of England to hike its key lending rate any time soon. This morning’s UK employment data and Bank of England minutes have the potential to be market moving for the Pound; in the meantime Sterling is expected to trade with a NEUTRAL TO POSITIVE bias.

The US DOLLAR is almost certain to be entering a period of choppy trading during the next 48hrs. Support for the Greenback has firmed in the past two weeks thanks to a slew of firmer than anticipated data sets from the States. These have led market participants to the conclusion that this evening’s Federal Reserve FOMC policy meeting will yield an announcement that the $85bn per month US Quantitative Easing programme is set to be tapered. However, the consensus amongst economists is that the Fed will deem it too early for a cut to QE just yet. The Buck is therefore forecast to trade on a NEUTRAL TO NEGATIVE footing moving forward.

The AUSTRALIAN DOLLAR surprisingly held its ground against Sterling yesterday, ending the European session at 1.8250. Comments from the Reserve Bank of Australia on Monday night suggesting that the current domestic budget deficit will still be here in ten years time are likely to hurt the Aussie moving forward. Needless to say, a cut to Quantitative Easing by the Federal Reserve tonight could send the Australian unit into freefall. The Aussie is therefore expected to trade on a NEGATIVE footing in the lead up to Christmas.

The CANADIAN DOLLAR held on to its recent gains against Sterling during yesterday’s session. A stronger than anticipated showing from yesterday afternoon’s Canadian Manufacturing Shipments data helped the Loonie on the day, as did market rumours that the US Federal Reserve will opt to maintain it Quantitative Easing programme at its current level of $85bn per month. The outlook for the Canadian tender is therefore NEUTRAL TO POSITIVE.

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