Pound (GBP) Forecast: Sterling Exchange Rate to Drop vs Euro (EUR), Dollar (USD), Australian (AUD) & New Zealand (NZD) Dollars

May 14, 2014 - Written by David Woodsmith

STORY LINK Pound (GBP) Forecast: Sterling Exchange Rate to Drop vs Euro (EUR), Dollar (USD), Australian (AUD) & New Zealand (NZD) Dollars

The exchange rates forecast for the Pound Sterling to Euro (GBP/EUR) , US Dollar (USD), Australian (AUD) and NZ Dollars (NZD) is looking negative.

On the face of it, this morning’s session should have been a positive one for the Pound Sterling (currency:GBP) – official UK government figures revealed that the number of people out of work in Britain dropped by a sizeable 133,000 during the three months leading up to the end of March. Meanwhile, Bank of England Governor Mark Carney stated in his Bank’s Quarterly Inflation Report that UK interest rates would on the way up sooner rather than later. However, in spite of these ostensibly positive developments, the Pound euro and Pound US Dollar exchange rates tumbled to as low as 1.2217 GBP/EUR and 1.6754 GBP/USD respectively.

The current Pound Sterling exchange rates at 14:45 are as follow:
- The Pound Euro exchange rate is trading down -0.39% at 1.22315 GBP/EUR.
- The Pound Dollar exchange rate is trading down -0.38% at 1.67672 GBP/USD.
- The Pound Australian Dollar exchange rate is trading down -0.74% at 1.78425 GBP/AUD.
- The Pound New Zealand Dollar exchange rate is trading down -0.84% at 1.93436 GBP/NZD.

Why the poor Pound Sterling outlook today?

The reason for the lack of a forward move for the Pound Sterling following the keynote UK jobs data can be summed up by David Tinsley of leading investment bank BNP Paribas, who observed that, "the proportion of people working part-time because they can't find a full-time job is now falling, but remains relatively high." The feeling that the government numbers do not fully reflect the picture in Britain’s fragmented jobs market appears to be holding back the Pound.

Correction due for Pound to Euro and Pound to Dollar exchange rates

Meanwhile, Carney’s suggestion that a tightening of the Bank of England’s monetary policy is close at hand provided investors with no new information – futures markets were pricing-in a first rate increase in a fresh cycle of hikes for next April, even before Carney took to the lectern. Analysts are forecasting that Sterling’s disappointing showing today may turn into a more pronounced correction for the Pound euro GBP/EUR and Pound US Dollar GBP/USD exchange rates.

British Pound to Aus & NZ Dollar forecast further losses

Elsewhere, the Pound Australian Dollar and Pound New Zealand Dollar exchange rates have dropped below the 1.7900 GBP/AUD and 1.9400 GBP/NZD levels respectively as market participants show a renewed appetite for risk thanks to a quietening of tensions in the eastern European trouble spot which is Ukraine. Further losses are now predicted for GBP/AUD and GBP/NZD.

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