GBP/USD at 1 month highs. GBP/USD, GBP/EUR, GBP/NZD exchange rate forecast (Mike Vaughan)

GBP EUR Exchange Rate: Weekly Review July 16  

Sterling exchange rates have had an interesting time of late rallying against the Euro in the wake of the Cyprus debacle (ministers meet today to finalise the bailout with some analysts suggesting the cost of the rescue may rise to €23bn) and the USD but still looking significantly out of favour when paired against the Australian and New Zealand Dollar. In fact the latter two are currently trading at near record highs against the pound a trend that may well continue in the short term and I would certainly urge anyone selling AUD and NZD to take stock of their positions whilst rates are so strong.

What’s in store for Sterling?

For me the overriding factor to determine the direction for Sterling against a host of currencies will be the avoidance of the triple dip recession. Earlier this week the NIESR (National Institute for Economic and Social Research) released its latest prediction showing revised figures of 0.1% suggesting the UK may just scrape through into positive territory as far as GDP and growth is concerned.

We will not find out the official results until the 25th April and expect market volatility in the run up to this date, but should we avoid the ‘triple dip’ then we may finally see some much need support for sterling. Of course with the result very much on a knife edge it could swing Sterling either way and continue this period of market volatility and uncertainty.

GBP/USD exchange rates

Sterling has seen a mini-recovery against the greenback having regained over 6 cents from the 1.48 lows seen this time last month. This is a near 4% swing in favour of sterling and to me represents a good buy opportunity.

Today we have plenty of data that could affect cable starting with retail sales figures at 13:30 BST and finishing with a speech from Federal Reserve Chairman Ben Bernanke at 17:30. Retail sales are expected to show a drop month on month and may create further opportunities for those clients that are in a position to take advantage.

Those looking to buy dollars may wish to avoid Bernanke’s speech at 17:30. Tuesdays FOMC (Federal Open Market Committee) minutes suggested the FED’s stance on quantitative easing could be wound down throughout the course of 2013 and should Bernanke re-confirm this then we may see the dollar recover late on, his speech may also indicate as to what future policies the FED could introduce and outline the FED’s stance on the current US economy. The old saying goes that ‘when the US sneezes the world catches a cold’, therefore any
sentiment from Bernanke is keenly viewed by investors worldwide and can cause large shifts on the money markets.

NZD at record highs           

As mentioned in yesterday’s market report the Kiwi dollar has been going from strength to strength in recent weeks and in fact reached near record high over the course of yesterday’s trading. Recent trends have been attributed to improved imports from China, and in particular an increase in demand for products in New Zealand.

The moves have been quite staggering in recent years having gained in excess of 20% since March 2011 and over 10% since the start of this year. Should you have a requirement to sell NZD you will do very well to find a better time than this.

In other news…………

The Bitcoin virtual currency lost half its value on Wednesday because of a panic sell-off. From a high of $260 (£169) for each Bitcoin, the value dropped to about $130 (£84) in just six hours. The selling frenzy began as Bitcoin’s main exchange, MTGox, struggled to keep up with the volume of trade in the virtual currency. The “soaring price” of the Bitcoin has made it impossible for MT to cover what it owes to members – has the Bitcoin bubble burst?

As one if the UK’s longest standing independent currency brokers we have the ability to buy and sell nearly all major currencies but sadly for some cannot trade the Bitcoin. However shouldyou be looking at a more traditional investment such as property overseas, or emmigration, or have a substantial corporate trasnsaction to arrange then please contact the office on 01494 787478 or email [email protected] for further information on the currency service we can provide.