Pound Sterling Currency Forecast vs EUR USD NZD - 'Brexit' Issue Worries Investors

June 13, 2016 - Written by Ben Hughes

STORY LINK Pound Sterling Currency Forecast vs EUR USD NZD - 'Brexit' Issue Worries Investors

The Pound's appeal has remained low of late, on account of the latest EU Referendum polls raising the odds of a 'Brexit' taking place.

Pound Sterling (GBP) Exchange Rate Outlook Neutral to Negative

The POUND STERLING (currency : GBP) is forecast to struggle to hold its current relative value in the global currency market during coming sessions as investors factor-in evidence that UK voters may vote for a ‘Brexit’ next Thursday. Yields on UK 10-year government bonds dropped to a record low on Friday as investors sought out safe haven assets, underscoring the potential for a ‘Leave’ vote in next week’s referendum; the outlook for Sterling is therefore NEUTRAL TO NEGATIVE.

Euro (EUR) Exchange Rate Outlook Neutral to Negative

The EURO (currency : EUR) has benefitted from the near-term weakening of the US Dollar and the Pound Sterling via arbitrage funding.

Many analysts therefore argue that the single currency is now overbought in the market, given the fact that the European Central Bank (ECB) is still pumping €80 bn per month into the euroland’s credit markets via Quantitative Easing and that deflation persists in the region. When the focus swings back onto these factors, the shared currency is likely to suffer once more.

The forecast for the euro is NEUTRAL TO NEGATIVE and the Pound euro exchange rate stands at 1.2666 GBP EUR.

US Dollar (USD) Exchange Rate Outlook Neutral to Positive

The market has a habit of over-reacting to disappointing data sets and analysts suggest that the sell-off suffered by the US DOLLAR (currency : USD) in the aftermath of this month’s weak US job creation numbers is one such instance.

Futures markets imply that there is virtually no chance that the US Federal Reserve will hike its headline interest rate this week; however, a July increase remains a live possibility, making the outlook for the Buck NEUTRAL TO POSITIVE. The GBP USD exchange rate sits at 1.4255.

New Zealand Dollar (NZD) Exchange Rate Outlook Neutral to Positive

The near-term performance of the NEW ZEALAND DOLLAR (currency : NZD) hinges on Wednesday’s GlobalDairyTrade auction results, with a bounce for Whole Milk Powder’s hammer price providing the Kiwi with a fillip. In the meantime, the New Zealand unit is forecast to trade on a NEUTRAL TO POSITIVE footing given last week’s decision by the Reserve Bank of New Zealand to hold its benchmark interest rate.

The GBP NZD exchange rate stands at 2.0195.

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TAGS: American Dollar Forecasts Euro Forecasts New Zealand Dollar Forecasts Pound S Forecasts