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Pound, Euro, Dollar + New Zealand Dollar Foreign Exchange Rate Forecasts + Predictions (GBP EUR USD NZD)

August 18, 2014 - Written by John Cameron

Today, we précis our prediction and exchange rate forecasts for four of the world’s major currency pairs – British Pound, Euro, US Dollar and NZ Dollar (GBP EUR USD NZD). Once again, the euro is forecast to put in the weakest performance; the Pound Sterling is now predicted to be the best-performing.

The POUND STERLING (currency:GBP) has outperformed all of the other sixteen most actively traded global currencies without exception during today’s session.

The Pound endured a pronounced dip in support following the IMF’s assertion earlier this month that it was overvalued by as much as 10%, however the UK unit has recovered its poise during recent sessions as investors price-in the likelihood that the Bank of England will be one of the world’s first central banks to hike interest rates.

If Wednesday’s minutes of the most recent Bank of England policy meeting reveal that one or more policymakers has voted for a tightening of monetary policy, then the Pound is forecast to register further gains.

The outlook for Sterling is NEUTRAL TO POSITIVE.

- The Pound Sterling to Euro exchange rate is trading up +0.22% at 1.25137 GBP/EUR.
- The Pound Sterling to New Zealand Dollar exchange rate is trading up +0.1% at 1.97367 GBP/NZD.
- The Pound Sterling to US Dollar exchange rate is trading up +0.01% at 1.67198 GBP/USD.

The EURO (currency:EUR) edged lower against the US Dollar and Sterling today following the publication of a below par set of regional Trade Balance data.

Thursday’s session brings the next risk events of note for the single currency; look for the latest surveys of Germany and the whole of the eurozone’s manufacturing sectors, along with this month’s Consumer Confidence survey, to move the market.

Looking at the bigger picture, the pressure is likely to increase on the euro in the medium term as market participants increase their bets that the European Central Bank will be introducing a bout of all-out Quantitative Easing later this year.

The single currency is forecast to trade on a NEGATIVE footing moving forward.

- The Euro to Pound Sterling exchange rate is trading down -0.22% at 0.79912 EUR/GBP.
- The Euro to New Zealand Dollar exchange rate is trading down -0.12% at 1.57721 EUR/NZD.
- The Euro to US Dollar exchange rate is trading down -0.21% at 1.33612 EUR/USD.

The US DOLLAR (currency:USD) has lost ground against Sterling so far today.

Last Thursday’s latest weekly employment figures, which revealed the highest level of domestic Initial Jobless Claims for some six weeks, have continued to weigh down the Buck.

Investors have taken the data as an indicator that an interest rate hike from the Federal Reserve remains some way off. The minutes from the latest Fed policy meeting will be released on Wednesday evening.

If they once again allude to the patchy nature of the recovery in the American jobs market, then the Buck is likely to ship further support across the board. In the meantime, the Greenback is likely to trade with a NEUTRAL TO NEGATIVE bias.

- The US Dollar to Euro exchange rate is trading up +0.21% at 0.74844 USD/EUR.
- The US Dollar to Pound Sterling exchange rate is trading down -0.01% at 0.59810 USD/GBP.

The NEW ZEALAND DOLLAR (currency:NZD) has lost a little ground against the Pound today. Last night’s weaker than anticipated Chinese Foreign Direct Investment data held back the Kiwi on the day.

Meanwhile, the latest Reserve Bank of New Zealand 2-Year Inflation Expectation survey, due for publication early tomorrow morning, is likely to alter the trajectory of the Kiwi into the medium term.

The RBNZ’s policymakers have consistently stated that the New Zealand unit is overvalued during recent weeks and have publicly called a halt to the bank’s rate-hiking cycle in an effort to devalue their local tender. It would appear likely that tomorrow’s report will contain further anti-Kiwi rhetoric, so the outlook for the NZ tender is NEUTRAL TO NEGATIVE. GBP NZD exchange rate stands at 1.9727.

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