British Pound Sterling FX Exchange Rate Forecast Against Euro, US Dollar and New Zealand Dollar

Modified: Tuesday, 19 May 2015 22:19 BST - Written by John Cameron

STORY LINK British Pound Sterling FX Exchange Rate Forecast Against Euro, US Dollar and New Zealand Dollar

The POUND STERLING (currency:GBP) initially lost ground against the other major global currencies during yesterday’s session. Last month’s domestic CPI inflation data, which revealed that for the first time since 1960 the UK economy had slipped into deflation, held back the Pound on the day. This morning’s Bank of England monetary policy committee meeting minutes have the potential to send Sterling higher if they reveal one or more committeemen voted in favour of a rate hike this month. The forecast for the Pound is NEUTRAL.

The EURO (currency:EUR) endured a horror session on the markets yesterday, with the shared currency trading down by the best part of 2% against the US Dollar at one point. Comments from Greece’s controversial Finance Minister Yanis Varoufakis suggesting that his debt-troubled nation required a credit injection by next week upped the ante in Greece’s ongoing debt talks. Meanwhile, in the background, the European Central Bank’s €1 trillion+ Quantitative Easing programme continues to rumble on. The outlook for the single currency continues to be NEGATIVE and the GBP EUR exchange rate stands at 1.3910.

The US DOLLAR (currency:USD) forged ahead versus both the Pound and the euro during yesterday’s trading in the global currency markets. A stellar set of domestic housing market numbers, published at the start of America’s trading day, helped the Buck’ fortunes. The data galvanised the impression that the recent softening of US economic stats is temporary in nature and that the Q2 GDP figures from the world’s premier economy will be strong. Look out for the latest US Mortgage Application data, due for publication at lunchtime today, to afford the Greenback further near-term direction. In the meantime, analysts forecast that the Greenback will trade with a NEUTRAL TO POSITIVE bias. GBP USD stands at 1.5520.

The NEW ZEALAND DOLLAR (currency:NZD) staged a mini-comeback in the markets yesterday, gaining 0.60% against the Pound Sterling. The Kiwi has been heavily downsold over the past week as investors price-in an increased percentage chance that the Reserve Bank of New Zealand will be reducing its yield advantage by cutting its interest rate again before the end of the year. The New Zealand unit has been assisted by the generalised ‘risk on’ trading environment in the markets over the past 24hrs, but with time running out for a Greek debt deal, this is by no means guaranteed to persist. The forecast for the Kiwi is NEUTRAL TO NEGATIVE and GBP NZD sits at 2.1105.

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