Exchange Rate Forecasts for the Pound Sterling, Euro and the Australian Dollar

Modified: Tuesday, 3 February 2015 22:57 BST - Written by John Cameron

STORY LINK Exchange Rate Forecasts for the Pound Sterling, Euro and the Australian Dollar

Today’s session has been marked by major movements in the global markets, leading to sharp moves for several leading currency pairs.

Pound Sterling Falls vs Euro Exchange Rate

The Pound Sterling euro exchange rate confounded analysts by dropping into the 1.3100s a short time ago GBP EUR.

The pair had been changing hands at above the 1.3500 threshold during the immediate aftermath of the Greek election result, which was announced less than ten days ago.

The move, which initially left market participants scratching their heads, was driven by the news that Greece’s new government has eased its previous demands to write off a large tranche of the Billions of euros which the debt-addled Hellenic state owes to its creditors.

Greek Debt Deal imminent?

The mood of reconciliation was augmented by comments from European Union President Jean-Claude Juncker, who stated earlier that the region as a whole would, ‘have to adapt a certain number of our policies,’ in order to keep Greece happy.

However, he stopped short of a full-tilt concession by warning that the EU is, ‘not going to change everything’.


However, even though the two warring factions in mainland Europe appear to be coming closer together, any truce which is reached is likely to be a fragile one and analysts predict that, with the European Central Bank’s Quantitative Easing programme set to begin next month, the outlook for the euro remains fervently negative.

A break towards the 1.4000 GBP EUR level still appears possible sooner rather than later for the Pound Sterling to euro exchange rate.

Australian Dollar Exchange Rate Forecast Turns Negative

Elsewhere, last night’s surprise decision from the Reserve Bank of Australia to trim its key lending rate by 25 basis points to a fresh record low of 2.25% has hit the Australian Dollar (currency:AUD) hard.

GBP AUD was trading down in the 1.9100 during the middle part of today’s Asian session, but by the time Europe’s traders got to their desks this morning, GBP AUD had sprung to a fresh 5 ½ year high of 1.9681.

With global central banks moving towards easier monetary policy, this is unlikely to be the last near-term rate cut from the RBA.

The Aussie is now forecast to trade with a NEGATIVE bias into the medium term.

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TAGS: Australian Dollar Forecasts Currency Predictions Euro Forecasts Eur Forecasts