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Exchange Rate Forecasts: Euro (EUR), Pound (GBP), Rupee (INR), Lira (TRY), Rand (ZAR), Swiss Franc (CHF) & HK Dollar (HKD)

December 20, 2013 - Written by John Cameron

The EURO (currency:EUR) has held steady against Sterling on the day, causing the Pound to Euro exchange rate to loiter around the 1.1970 GBP/EUR level. This morning’s German GfK Consumer Confidence survey beat expectations, suggesting that the eurozone’s premier economy remains in rude health. The longer the Pound to Euro stays below its 11 month high in the mid-1.2100s, the greater investors’ confidence in the single currency will grow. The outlook for the euro is NERUTRAL TO POSITIVE.

The POUND STERLING (currency:GBP) has enjoyed a boost this morning with the release of finalised Q3 GDP data which brought an upward revision from previous versions to 1.9%. Analysts had not been expecting such a strong outcome, so the Pound gained as a result. With no further tier one data releases for the remainder of the year, Sterling is now expected to trade with a NEUTRAL TO POSITIVE bias as we head into the New Year.

The INDIAN RUPEE (currency:INR) remains firmly in the ‘at risk’ category following Wednesday evening’s announcement of a tightening of monetary policy from the Federal Reserve. Pound Rupee exchange rate (GBP INR) currently trades at 101.4899 – well below its multi-year high in the 106s. With US policymakers confirming that American interest rates will remain low for the long run and with data from India this week revealing a sharply lower domestic current account deficit, the outlook for the Rupee is NEUTRAL TO POSITIVE.

The TURKISH LIRA (currency:TRY) has continued to tumble in the global currency markets, sending the GBP TRY exchange rate to a fresh multi-year high of 3.4239 earlier today. The run against the Turkish tender has been in place since last Spring when socio-political tensions in surrounding nations caused institutional investors to abandon the Lira. The US Federal Reserve’s announcement of a tapering of its QE programme, alongside a corruption probe against Turkey’s top politicians has accelerated the uptrend for Pound to Lira excvhange rate (GBP TRY) in recent sessions. The Lira is expected to trade on a NEGATIVE footing moving forward.

The SOUTH AFRICAN RAND (currency;ZAR) has endured another negative week thanks to a generalised dip in global appetite for risk which Wednesday’s Fed announcement in the US precipitated. Labour market tensions over the past 18 months have hurt the South African unit and a lack of willingness from investors to hold high-yielding currencies following the US central bank’s actions mean that the Rand is forecast to trade on a NEUTRAL TO NEGATIVE kilter in the short-to-medium term.

The SWISS FRANC (currency:CHF) has struggled to assert itself against Sterling this week, meaning that the GBP CHF exchange rate currently stands at 1.4687. The potential existed for a pronounced bout of support for the Franc as the US Federal Reserve policy announcement approached. However, the Fed’s assertion that American interest rates will remain low for years to come helped to limit the risk-negative effect of its announcement of a $10bn cut to QE. The Franc’s fortunes remain tethered to those of the euro, but in the absence of any shocks for the single currency, the CHF is expected to trade with a NEUTRAL bias.

The fortunes of the HONG KONG DOLLAR (currency:HKD) remain inextricably linked to those of the US Dollar due to the peg which remains in place between the two. The Pound HKD exchange rate currently stands at 12.6640, just below a proven band of resistance at the 12.7500 threshold. So far, the US Dollar has not come in for any significant support following Wednesday’s announcement of a tightening of Qe from the Federal Reserve. However, a delayed reaction to the development is expected by many analysts, meaning that the outlook for the Hong Kong unit moving forward is NEUTRAL TO POSITIVE.

Relevant Exchange Rates (Publish: 20/12/2013 17:00 GMT)

The Pound Sterling to Australian Dollar exchange rate is trading down -0.74% at 1.83316 GBP/AUD.
The Pound Sterling to Canadian Dollar exchange rate is trading down -0.11% at 1.74478 GBP/CAD.
The Pound Sterling to Swiss Franc exchange rate is trading down -0.42% at 1.46376 GBP/CHF.
The Pound Sterling to Euro exchange rate is trading down -0.29% at 1.19496 GBP/EUR.
The Pound Sterling to Hong Kong Dollar exchange rate is trading down -0.09% at 12.67832 GBP/HKD.
The Pound Sterling to New Zealand Dollar exchange rate is trading down -0.36% at 1.99000 GBP/NZD.
The Pound Sterling to Turkish Lira exchange rate is trading up +0.49% at 3.40905 GBP/TRY.
The Pound Sterling to US Dollar exchange rate is trading down -0.09% at 1.63500 GBP/USD.
The Pound Sterling to South African Rand exchange rate is trading down -0.65% at 16.89704 GBP/ZAR.
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