Exchange Rate Forecast

Exchange rate forecasts and foreign currency news

Will the Pound manage to hold on to its recent gains?

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After hitting an 8-year low against the Euro in early August the GBP/EUR rate is now trading back in the same trading range it’s found itself it for long periods of time since the Brexit vote.
Sterling has also recovered roughly 50% of its losses against the US Dollar since the Brexit, and it’s even recovered all of its post-Brexit vote losses against some major currency pairs such as the New Zealand Dollar.

UK GDP data weakens the Pound

Earlier this morning the UK GDP figure for the year came out worse than expected by 0.2%, and this resulted in a weakening of the currency. The Governor of the Bank of England, Mark Carney on the other hand has offered the markets some positivity after once again hinting at an interest rate hike in the UK as soon as November. This is generally considered to be a positive and I expect to see the Pound climb higher if this talk materialises into reality.

Will the Pound’s value continue to rise?

Those hoping that the Pound will continue to climb should be weary that the Pound could drop suddenly should negative news emerge surrounding the Brexit, as this has the potential to negatively impact sentiment surrounding the UK economy moving forward.

Next week Manufacturing, Construction and Services data will all be released out of the UK, as well as a proposed Inflation Report hearing. All have the potential to move markets should the figures either impress or disappoint so these are worth following closely.

UK property prices

It’s worth watching property prices as this morning it emerged that London property prices fell for the first time since 2009. They fell by 0.6% and London property prices are the worst performing in the UK. It will be interesting to see whether this continues and how it impacts the Pound’s value. With a interest rate hike potentially on the cards falling property prices could be worrying for home owners, and may give the Bank of England some food for thought.

Australian Dollar holds strong following RBA decision

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The Reserve Bank of Australia (RBA) kept the interest rate on hold last night and have suggested there is unlikely to be any further movements in the short term. RBA Governor Philip Lowe was keen to suggest that any further cuts to the rate would not be in the interest of the consumer, even though it would make borrowing cheaper; with the emphasis on gently raising interest rates over the next few years.

The economy in Australia isn’t really growing despite the Aussie Dollar experiencing major strength, especially against Sterling in the last year. However, the RBA seem to have managed to get a hold on the rising house prices that were concerning economists in the nation. In Sydney there was an enormous surge in buying houses as the RBA have cut rates by 3.25% since 2011, taking the rate from just under 5% to 1.5%.

Where to next for AUD exchange rates?

There will be more Australian economic data this week on Thursday and Friday. In the early hours of Thursday we will see the Trade Balance data and Retail Sales figures, both of which are important indicators of current economic conditions. This will be followed by New Home Loans and Investment Lending on Friday morning.

The housing related data is very significant currently with the latest emphasis on controlling property prices. Whilst the RBA have managed to control property prices that might mean there will be an increase in supply. If the market does start to drop and prices start to decrease encouraging more sales then there could be a relapse of the rising value.

If the Australian economy does start to pick up there could be optimism of interest rate hikes in the next year. The RBA have been vocal in announcing they want the interest rate to return to 3.5% in the near future, so rates will return to more common levels.