Weekly Currency Forecast (Tom Holian)

Pound to Dollar Rate Shrugs Off UK’s Economic Woes

Last week’s UK GDP figures showed that UK economic output rose to 0.8% for the previous quarter and the Office for National Statistics confirmed that there was strong data across British industry. The 2nd quarter of this year measured growth of 0.7% and this recent bout of data was the best seen for the UK in three years. Sterling did not seen the benefit of the numbers as many analysts had expected the news so GBPEUR exchange rates remained rather flat.

The EURUSD exchange rates have approached 1.40 recently but not quite got there yet but the US government shutdown has certainly weakened the Dollar with global investors choosing the Euro as their preferred safe haven currency for the time being. This has kept the Euro strong against the Pound and the best level for selling Euros seen since late August. So whilst the UK’s economic data seems promising this is not being reflected in GBPEUR exchange rates.

It was announced that the Eurozone growth has been slowing as of late as the PMI services sector showed figures of just 51.5 compared to the previous month of 52.2. However, whilst the data was lower it is still above 50 which represents growth. It also highlights how the Euro is maintaining its strength even in light of slightly negative results.

My opinion is that as the news from the US shutdown issue continues we could see further Dollar weakness and EURUSD rates break through 1.40. This could also force the Euro to gain strength against Sterling and therefore push rates below 1.17 which is where we have been trading this morning.

GBPAUD exchange rates have weakened over the last few weeks as the Chinese economy continues to announce positive data. Owing to Chinese demand of Australian natural resources this has kept the AUD strong against Sterling.

If you need to make a currency transfer and want to make sure you are getting good exchange rates feel free to contact me directly Tom Holian [email protected]