GBP exchange rates bounce back slightly
by Ben Amrany on Jan.26, 2011, under Predictions
After a torrid day on the markets for sterling exchange rates yesterday the pound has clawed back some of its losses by gaining 0.4% USD, 0.35% Euro, 0.5% AUD, 0.62% ZAR.
The minutes from this months rate decision came out and there was a slight surprise in that another member of the MPC voted for a rate rise. The minutes though are from the decision that came out before the GDP figures yesterday so if there were to be a re-vote now there could well be a slightly different outcome.
After the GDP figures yesterday there would have been a big sell off in sterling which did not help the pound but looking ahead I still feel that there will be a lot of pressure on sterling exchange rates. Yesterdays data release went to show that economic growth seems to outweigh inflationary pressure at present and I think the likelihood of an interest rate rise is slim in the near term and may not come about until Q4 or even early 2012.
For the pound to really push on we need to see a rate rise sooner rather than later so i feel that the pound will linger in the teens against the Euro and very early 1.50′s or even late 1.40′s against the USD.
2011 will certainly prove to be a very rocky ride for sterling so please feel free to keep in contact with us if you have a currency requirement and we can talk you through the mechanics of trading with us.
Going forward, I expect the rally in the British pound to be short lived as growth concerns will likely outweigh inflation fears in the upcoming months as the rise in price pressures are expected to be temporary. Thus, the central bank may remain refrain from tightening throughout 2011 as the upward pressure on consumer prices are said to be temporary factors.
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January 27th, 2011 on 5:12 am
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