GBP/EUR & GBP/USD forecast September 2012

Thursday 13th September 2012
Good afternoon everybody. I’m posting a quick update on what’s been happening so far this week with exchange rates. In a nutshell, it’s not much! Sterling remains near a 4 month high vs the US Dollar, and is still just below €1.25 against the Euro. Let’s take a quick look at each cross in turn:

Pound/US Dollar remains near 4 month high

Rates are looking pretty good for the Pound against the US Dollar, remaining around the $1.61 level. The reason for this is firstly more confidence in the Eurozone, which has meant investors leaving the safe haven Dollar. This in turn has weakened it slightly making it cheaper to buy.

The rate is also supported by expectations of more monetary easing by the U.S. Federal Reserve which will be announced later this afternoon at 17:30pm. This has underpinned demand for perceived riskier currencies such as the Pound, and helped push rates up a little. Many analysts said the pound could rise further against the dollar if the Fed does relaunch its bond-buying programme, which tends to weigh on the dollar, but sterling was also vulnerable to the risk policymakers will hold fire.

All in all it’s a good time to look at buying Dollars, given it’s at a multi month high, and not very far away from the best it’s been in a year.

Sterling/Euro remains flat in the €1.24’s

In contrast to the good Pound/Dollar rate, Pound/Euro has fallen in recent weeks from the 4 year high we saw in the summer.

The single currency has been lifted by growing confidence in euro zone assets after Germany’s Constitutional Court gave the green light to the region’s new rescue fund and the European Central Bank’s bold plans to lower borrowing costs for struggling countries.

This means investors are much more confident of the Eurozone being able to weather further financial storms and bailouts, and the Euro has strengthened accordingly. A stronger Euro is more expensive to buy, and that’s why rates have fallen.

Over the last few days however the market has been very flat indeed, with hardly any movement in rates to note.

Tomorrow we have the G20 meeting starting, which is a gathering of finance ministers and central bank governors and thus could add a new dimension to the currency markets. Scheduled releases tomorrow also include EU inflation and unemployment numbers, US inflation and Retail Sales figures, so we could see a little movement then.

Also the FED’s actions this evening could cause some movements in rates. Keep an eye on the Twitter feed in the sidebar, which I regularly update with the latest exchange rates to see how things are moving.

I’ll be back on Monday morning with my usual detailed analysts of the Sterling/Euro rate and a full breakdown of next weeks economic data.

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