Sterling Forecasts Today: Pound Euro & Pound Dollar Exchange Rates Outlook for 2014

Modified: Wednesday, 18 June 2014 13:57 BST - Written by Minesh Chaudhari

STORY LINK Sterling Forecasts Today: Pound Euro & Pound Dollar Exchange Rates Outlook for 2014

Pound Dollar rate forecast: The ongoing positive momentum surrounding Sterling sent the Pound Dollar exchange rate (GBP/USD) up through the psychologically key 1.7000 level for the first time since August 2009.

The Pound Sterling (GBP) has continued to roar forwards in the global currency markets during today’s session, although the Pound Euro exchange rate is trading 0.11 per cent lower at 1.25283 GBP/EUR and the Pound Dollar exchange rate is trading 0.06% per cent higher at 1.69877 GBP/USD.

Why did the Pound rate soar? Market participants factor-in Bank of England Governor Mark Carney’s warning of last Thursday that UK interest rates might be on the way upwards sooner rather than later.

The pair topped out at 1.7011 earlier, but analysts suggest that there could be further upside to come for the pair in the short term. A break through the next significant resistance level heading higher, which comes at 1.7042 would represent a break to a fresh 68-month high for the pair, leaving the door open for a continuation up to the two to one level (last seen in April 2008).

Pound Euro rate forecast The Pound also moved to a significant new high against the euro exchange rate today, with GBP EUR hitting 1.2564 during morning trading. The Pound Sterling has not traded above this rate against the single currency since November 2012. However, with the widely-monitored Stochastic technical indicator suggesting that the pair may be near-term overbought, GBP/EUR may be due a correction sooner rather than later.

The fundamentals back up this theory; the Bank of England’s latest Quarterly Bulletin made mysterious reference to a ‘productivity puzzle’ which is currently at play in the British economy. The level of productivity in the UK economy currently stands at 16% below what it was during the lead up to the 2007/08 global financial crisis. This means that the quantity of goods / service produced per worker per hours is 16% lower than it was previously. The Bank is at a loss to explain why.

Another factor which could potentially weigh down Sterling moving forward is last night’s Rightmove House Price survey which showed a year-on-year increase in British property prices of 7.7% versus last month’s counterpart showing of 8.9%.

Relevant Pound Sterling, Euro & US Dollar exchange rates today, Wed 18/06/2014

The Pound Sterling to Australian Dollar exchange rate is trading down -0.13% at 1.81435 GBP/AUD.

The Pound Sterling to Canadian Dollar exchange rate is trading down -0.06% at 1.84131 GBP/CAD.
The Pound Sterling to Swiss Franc exchange rate is trading down -0.26% at 1.52122 GBP/CHF.
The Pound Sterling to Chinese Yuan exchange rate is trading up +0.01% at 10.56266 GBP/CNY.
The Pound Sterling to Euro exchange rate is trading down -0.21% at 1.24917 GBP/EUR.
The Pound Sterling to US Dollar exchange rate is trading down -0.06% at 1.69507 GBP/USD.
The Pound Sterling to South African Rand exchange rate is trading down -0.82% at 18.23361 GBP/ZAR.

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