Exchange Rate Predictions / Forecasts: Pound Sterling (GBP), Euro (EUR), US Dollar (USD) & Canadian Dollar (CAD)

Modified: Friday, 3 January 2014 13:51 BST - Written by Frank Davies

STORY LINK Exchange Rate Predictions / Forecasts: Pound Sterling (GBP), Euro (EUR), US Dollar (USD) & Canadian Dollar (CAD)

The POUND STERLING (currency:GBP) came in for a bout of sustained support during the first half of yesterday’s session. However, the UK unit lost ground when the New York trading day got underway as other major tenders, notably the US Dollar and the Aussie, gained support. A mildly disappointing British PMI Manufacturing survey didn’t help. This morning’s PMI Construction sector survey is the next risk event of note; in the meantime, the UK tender is forecast to trade with a NEUTRAL TO NEGATIVE bias.

The EURO (currency:EUR) started yesterday’s session in tame form, sending the GBP EUR exchange rate all the way up to 1.2088. The shift out of EUR-denominated assets was part of a broader move following the European Central Bank’s decision to cut interest rates to a new record low of 0.25% some two months ago. More talk from the ECB of a further loosening of the eurozone’s monetary policy in the lead-up to next Thursday’s policy announcement will surely send GBP EUR higher still. For now, analysts predict that the euro will change hands on a NEUTRAL TO NEGATIVE footing.

The US DOLLAR (currency:USD) enjoyed a strong performance in the global currency markets yesterday, sending the GBP USD exchange rate down to an intraday low of 1.6409 during London’s trading session. The improvement for the Greenback was largely driven by a brace of data releases in the US – weekly Initial Jobless Claims figures beat expectations and December’s ISM Manufacturing survey followed suit as investors priced-in a higher likelihood of further cuts to QE in the Stats. The outlook for the Dollar is now NEUTRAL TO POSITIVE.

The CANADIAN DOLLAR (currency:CAD) enjoyed one of its best trading days for sometime yesterday, sending the GBP CAD exchange rate down to 1.7375. The pair was trading down by well over 1.00% at one point as the Loonie hovered up support following this week’s stronger than anticipated US data. Investors are pricing-in a higher percentage chance that QE will be cut in the States following a strong US Consumer Confidence survey on Wednesday and yesterday afternoon’s positive American Manufacturing figures. However, with Janet Yellen – a well-known supporter of QE – taking the helm at the US Fed next month, the Canadian tender’s gains may prove ephemeral. The outlook for the CAD is NEUTRAL TO NEGATIVE.

Key Pound, Euro & Dollar Exchange Rates Today (11:30 GMT 03/01/2013)

The Pound Sterling / Canadian Dollar exchange rate is trading down -0.19% at 1.75178 GBP/CAD.
The Pound Sterling / Euro exchange rate is trading up +0.27% at 1.20693 GBP/EUR.
The Pound Sterling / US Dollar exchange rate is trading up +0.11% at 1.64672 GBP/USD.
The Euro / Canadian Dollar exchange rate is trading down -0.46% at 1.45143 EUR/CAD.
The Euro / Pound Sterling exchange rate is trading down -0.27% at 0.82855 EUR/GBP.
The Euro / US Dollar exchange rate is trading down -0.16% at 1.36438 EUR/USD.

The US Dollar / Canadian Dollar exchange rate is trading down -0.3% at 1.06380 USD/CAD.
The US Dollar / Pound Sterling exchange rate is trading down -0.11% at 0.60727 USD/GBP.
The US Dollar / Euro exchange rate is trading up +0.16% at 0.73293 USD/EUR.

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TAGS: American Dollar Forecasts Canadian Dollar Forecasts Dollar Pound Forecasts Eu Forecasts