Sterling, Euro & Aussie Dollar forecast

Good morning. Easing concerns about the EU banking sector mean that riskier assets are now sought by investors. For exchange rates, this means the pound is now at a 2 month high versus the US Dollar. Against the Euro however, the stronger currency means we’re still at the €1.20 mark. At 08:30am 8th July 2010 rates are as follows:

  • GBP/EUR 1.2003
  • GBP/USD 1.5178
  • GBP/AUD 1.7360
  • GBP/NZD 2.1474
  • GBP/CAD 1.5872
  • GBP/CHF 1.6006
  • GBP/ZAR 11.495
  • GBP/HKD 11.819
  • GBP/NOK 9.6713
  • GBP/JPY 133.84
  • EUR/USD 1.2640

Sterling

Today is significant, as we have a raft of UK economic data that could affect exchange rates. We have house prices, Industrial and Manufacturing production, and an interest rate decision. It’s expected that several of the 9 member committee will vote for an interest rate increase, although overall rates will likely be left on hold at 0.5%.

Sterling may be supported this morning, but after the decision we could see a retraction if rates are indeed left on hold. We’ll have to wait 2 weeks for the minutes of the meeting to see how they voted, and these minutes will probably sway the market more than today’s actual decision.

Euro

Also an interest rate decision, but rates again will probably be left on hold. The renewed confidence in the banking sector has reversed the recent decline of the Euro, and it’s becoming more expensive to purchase. A week ago, rates were close to €1.24 but have since retracted around 4 points. In may, rates were at €1.13, so it’s still a good buying level despite the decline.

Australian Dollar

Employment change figures early this morning show that nearly 46 thousand jobs were created. The markets thought that only 15 thousand new jobs would be created. So, the figures were much better than expected, and the AUD has strengthened as a result. Early in the week rates stood at around $1.80, however this morning we’re down at $1.7350, clearly illustrating that when figures are significantly different than forecast, exchange rates can move significantly.

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