Foreign Exchange Rate Forecasts / Predictions For Pound Sterling, Euro, Australian Dollar & US Dollar

April 2, 2014 - Written by James Fuller

STORY LINK Foreign Exchange Rate Forecasts / Predictions For Pound Sterling, Euro, Australian Dollar & US Dollar

The POUND STERLING (currency:GBP) had a mediocre day on the markets yesterday after the publication of a disappointing PMI survey of the domestic manufacturing sector. The Pound has been struggling since the release of worrying data on Monday which suggested that the level of UK mortgage approvals had dropped for the first time for a year. The nagging fear that the Bank of England may be set to begin ‘talking down’ the Pound also threatens to hamper the UK tender moving forward. The Pound Sterling forecast is therefore NEUTRAL.

Figures pointing to a larger than expected dip in German unemployment last month supported the EURO (currency:EUR) during yesterday’s trading day. The forward move for the single currency sent the Pound euro exchange rate down to as low as 1.2035 GBP/EUR during the latter part of the European equities session. However, investors holding euros will be worried about the potential content of ECB President Mario Draghi’s post decision press conference tomorrow. Draghi may be forced into accepting that deflation is a threat in the giant eurozone economy following this week’s lacklustre euroland inflation numbers. The Euro forecast to trade on a NEUTRAL footing as a consequence.

The AUSTRALIAN DOLLAR (currency:AUD) improved against Sterling in the aftermath of the Reserve Bank of Australia’s policy announcement early yesterday morning. However, gains for the Aussie could evaporate as economists analyse the message contained in the RBA’s accompanying statement more closely. RBA Governor Glenn Stevens emphatically stated in this missive that the Australian unit remains overvalued; if the RBA begins to put out negative messages regarding the state of the Antipodean state’s economy during coming months, then look for the Aussie to give up renewed ground. The Australian Dollar forecast is therefore NEUTRAL TO NEGATIVE and the current Pound Australian Dollar exchange rate stands at 1.7981 GBP/AUD

The US DOLLAR (currency:USD) remains at a low ebb in the markets. However, trading statistics show that a large majority of currency market investors holding Dollar positions are now Dollar-long. From a technical perspective, the fact that GBP USD reached a multi-year high in the middle part of February but has held below this level during the whole of the intervening period suggests that the pair may have topped out. With the Fed hinting that interest rate rises in the US may not be too far away, look for the Buck to trade with a NEUTRAL TO POSITIVE bias moving forward. The Pound Dollar exchange rate currently stands at 1.6641 GBP/USD.

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