Exchange Rates Forecast 2014: Pound Sterling (GBP) to Euro (EUR) & Australian Dollar (AUD) Short Term Gains Forecast

Modified: Tuesday, 20 May 2014 14:35 BST - Written by Frank Davies

STORY LINK Exchange Rates Forecast 2014: Pound Sterling (GBP) to Euro (EUR) & Australian Dollar (AUD) Short Term Gains Forecast

Exchange Rates Forecast 2014: Pound Sterling (GBP) to Euro (EUR) & Australian Dollar (AUD) are forecast to see short term gains: The Australian Dollar (currency:AUD) took a bath in the markets overnight following the publication of a decidedly dovish set of Reserve Bank of Australia minutes.

The memos of the RBA’s May policy get-together made no mention of any future interest rate hike for the Antipodean nation. Investors had been expecting the RBA to talk up a near-term tightening of monetary policy after it dropped its bias towards cutting rates earlier this year. The absence of a timeline for increasing Australian rates hit the Pound Aussie Dollar exchange rate up to 1.8202 (GBP/AUD) during early trading.
The GBP AUD exchange rate was given a further boost at 0930hrs this morning when the latest set of UK Consumer Price Index inflation figures outstripped expectations. The closely-monitored data set revealed that British prices rose at an above-expectations 1.8% last month – up from March’s counterpart showing of 1.6%.

BoE interest rate rise coming soon?

With UK inflation having dipped below the government’s target rate of 2.0% earlier in the year, the numbers suggest that a near-term break back above this level may be close at hand. In such an instance, expect analysts to bring forward their expectations for the timing of the next interest rate rise from the Bank of England.

GBP to Euro rate jumps to 16 month high on UK price rise

The UK price rise data also helped the Pound Sterling gain against the euro on the day, sending the Pound to Euro exchange rate up to a fresh 16-month high of 1.2317 GBP/EUR shortly after the release. The pair has subsequently dropped back down to below the 1.2300 threshold and for technical reasons, further downward movement is forecast for the pair as speculators take profit at range-topping rates.

Tomorrow morning’s Bank of England minutes and Retail Sales numbers are the next risk events of note as far as investors holding Sterling-denominated assets are concerned. Look for a strong shop sales figures to push the Pound Sterling back up to its near-term highs against both the euro and the Australian Dollar.

Top Mid-Market Pound Sterling Exchange Rates (20/05/2014)

The Pound Sterling to Australian Dollar exchange rate is trading up +1% at 1.81967 GBP/AUD.
The Pound Sterling to Canadian Dollar exchange rate is trading up +0.41% at 1.83585 GBP/CAD.
The Pound Sterling to Swiss Franc exchange rate is trading up +0.17% at 1.50233 GBP/CHF.
The Pound Sterling to Euro exchange rate is trading up +0.24% at 1.22913 GBP/EUR.
The Pound Sterling to Hong Kong Dollar exchange rate is trading up +0.15% at 13.05430 GBP/HKD.
The Pound Sterling to New Zealand Dollar exchange rate is trading up +0.84% at 1.96425 GBP/NZD.
The Pound Sterling to Polish Zloty exchange rate is trading up +0.2% at 5.14716 GBP/PLN.
The Pound Sterling to US Dollar exchange rate is trading up +0.14% at 1.68386 GBP/USD.
The Pound Sterling to South African Rand exchange rate is trading up +1.21% at 17.63193 GBP/ZAR.

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TAGS: Australian Dollar Forecasts Currency Predictions Euro Forecasts Eur Forecasts