FX Outlook for British Pound Sterling vs EUR USD NZD

Modified: Wednesday, 18 March 2015 23:49 BST - Written by John Cameron

STORY LINK FX Outlook for British Pound Sterling vs EUR USD NZD

Pound Sterling Performs Poorly

The POUND STERLING (currency:GBP) endured another torrid day in the markets yesterday. Sterling took a hit during early trading thanks to a disappointing set of domestic labour market data. However, a business-friendly pre-election Budget Statement from Chancellor George Osborne and the revelation in the latest Bank of England minutes that two BoE monetary policy committeemen had considered voting for a rate hike, may help the Pound moving forward. The outlook for Sterling is now NEUTRAL.

Euro Steadies

The EURO (currency:EUR) enjoyed another day of strong gains against the Pound yesterday. The move in favour of the shared currency has now lasted five trading days and appears to be driven by technical rather than fundamental factors. Investors feel that the euro was oversold and are buying back in for a short term profit, but the euroland unit’s problems persist in the form of Greece and QE. These are not going to dissipate any time soon, so the single currency is forecast to trade on a NEGATIVE footing in the short to medium term.

US Dollar Gets Hammered

The US DOLLAR (currency:USD) took a serious hit last night when the US Federal Reserve poured cold water on invetsors’ belief that American interest rates will be on the way up soon. The US central bank’s assertion that it needs to be ‘reasonably confident’ that domestic inflation was increasing before considering a rate hike was taken as a sign that US policy will remain ultra-loose into the medium term. The Fed’s assertion that the US economy has ‘moderated somewhat’ also suppressed support for the Buck. Analysts now forecast that the US unit will perform on a NEUTRAL TO NEGATIVE footing in the short term. GBP USD stands at 1.4890.

New Zealand Dollar Surges

The NEW ZEALAND DOLLAR (currency:NZD) continued to record strong gains against Sterling yesterday, sending the GBP NZD exchange rate down to well below the two to one threshold. The Kiwi capitalised on a weak showing from Sterling on the day and was not unduly held back by a sharp drop in dairy prices at the latest GlobalDairyTrade auction during the early part of the week. The Kiwi appears to be climbing no matter what the New Zealand data flow is thanks to the Reserve Bank of New Zealand’s more neutral stance on its future monetary policy. With the RBNZ confirming last week that a domestic rate hike is now a realistic possibility, the Kiwi is forecast to trade with a NEUTRAL TO POSITIVE bias moving forward.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: American Dollar Forecasts Currency Predictions Dollar Poun Forecasts