US and UK GDP data the key points to focus on for the rest of the week. GBP/EUR, GBP/USD and GBP/AUD exchange rate forecast (Mike Vaughan)

For me the key market data for the rest of the week will be US GDP today at 13:30 BST and UK GDP data tomorrow morning at 09:30. Both are revised quarter one figures and should be viewed with interest. Also watch out for Chancellor George Osborne’s spending review at 12:30 where he is set to outline the government’s plans for a further £11.5bn of government cuts.

For anyone looking at the AUD and NZD we are close to a two year high with the high/low for both currencies at a near 16% spread since March. Fortunately for AUD and NZD buyers the rates are at the top end and with the AUD at close to 1.68 and NZD above 2 this represents value and looks a good buy in the current climate.

GBP/EUR

Sterling exchange rates have remained relatively range bound between against the Euro for the past 6-8 weeks sitting between 1.1650 and 1.18 during this time. Thursday’s GDP data could be important for any short term trends. Any improvement on the most recent figures of 0.3% and this could lead to some strength for the pound on Thursday, of course should the figure be revised down then watch for sterling weakness.

Longer term next month could prove very interesting for the Pound. July will see the new Bank of England Governor Mark Carney taking over from Mervyn King. Many analysts are expecting Mark Carney to look to increase QE to help give the UK economy another boost, but with some positive data sets of late (retail sales figures showed a marked improvement, and the housing market is showing signs of a recovery) I believe QE will stay on hold for now. I would, however, expect an extension within the next three months, something that may put pressure on the pound longer term.

GBP/USD Exchange Rates

Recent trade levels have been close to a four month high, however following last week’s news that the FED are likely to begin ‘tapering’ down its quantitative easing policies the dollar has gained over 1.5% against sterling. For me anyone looking at buying dollars should still consider current levels as a good buy opportunity, whereas as anyone selling I believe is likely to get more value in the coming weeks.

Short term buyers of the dollar should watch out for US GDP figures on Wednesday at 13:30. Figures are expected to remain at 2.4% but I would not be surprised to see a slight improvement as sentiment from the US has been more positive of late, this could lend to some dollar strength this afternoon.

Will the AUD breach 1.70?

Since March the pound has rallied in excess of 20 cents against the Australian Dollar, in fact earlier this month levels were at their highest for buying AUD since September 2010.

For me this trend is likely to continue. The Reserve Bank of Australia have been open in calling for a weaker dollar to help improve exports in industries other than the mining sector and they may look to continue with their stance on interest rates to allow for this.

As a result I would look for a move towards 1.70 in the coming weeks. Should you be selling AUD but do not have full availability of funds then the use of a forward contract could prove very useful for guaranteeing your rate of exchange in advance.

To discuss the market conditions in more detail or should you have a transaction to arrange then please do not hesitate to contact me. As a specialist foreign exchange broker we have a number of contracts available to help clients avoid unwanted market volatility removing your exposure to any adverse market movement. If you would like to see what we can do for you and the potential savings we can make then contact the office on +44 (0)1494 725353 or email mgv@currencies.co.uk