Exchange Rate Forecast – GBP, EUR, USD, AUD, CAD

There is plenty of key economic data due for release this week but the week starts quietly with a US bank holiday and the main data set of note being the Rightmove House Price Index which has already been announced and has shown an increase in the average price of UK properties which is yet more positive news for Sterling exchange rates. In fact Sterling Euro (GBP EUR) exchange rates have pushed up even higher this morning closing in on the highest level in over a year meaning we are witnessing some excellent opportunities to buy Euros.

On Tuesday we have the Bank of Japan interest rate decision where interest rates are expected to remain on hold at 0.1% while the Reserve Bank of Australia release their latest set of minutes which may give a further insight into whether the Australian central bank will continue to avoid any further interest rate cuts and so this announcement which comes out in the very early hours of Tuesday morning could prove critical for GBP AUD exchange rates. Later on Tuesday we have inflation figures for the UK in the form of Consumer Price Index and Retail Price Index which have been two of the most important data sets as the Bank of England are targetted to keep the level at 2% and expectation is that inflation will remain at that level and should this be the case we could see a boost for Sterling exchange rates. Tuesday finishes with some US data the most noteworthy being housing market figures, so anyone with a USD requirement should keep an eye on these data sets.

For clients looking to transfer Sterling Wednesday could be the most important day of the week as we have the Bank of England minutes and then possibly most importantly the unemployment figures which if they show yet another drop will put more pressure on the Bank of England to raise interest rates sooner rather than latter and as a result could provide Sterling with a real boost and therefore could mean we see a spike in GBP exchange rates. Wednesday also sees the latest set of minutes from the recent Fed interest rate decision in the States which should give an insight nito the Fed’s view of the American economy which will be noteable as it is Janet Yellen’s first set of minutes since taking over from Ben Bernanke as the head of the Fed.

Thursday sees US inflation figures which are anticipated to remain steady around the 1.5%, this coupoled with the US unemployment figures means that this will be a key day this week for USD exchange rates. Should inflation remain steady and unemployment shows a drop we could witness some USD strength and considering how strong Sterling is against the USD at the moment it may mean that these current strong levels could be short lived.

Finally, the week ends with UK retail sales which will give an indication to the strength or otherwise of the UK high street, with the recent flooding I wouldn’t be surprised if we see retail sales take a hit over the next couple of months as fewer people are able to get out to the shops, in fact this could be the start of the knock on effect of the economic impact of the flooding. To complete the week’s economic data we have Canadian inflation figures which are expected to show a slight increase, which if this occurs we could see some CAD strength.

So, with so much key economic data due this week it could be a very busy day for the exchange rates and if you need to transfer funds internationally make sure you stay in close contact with one of our experienced currency brokers here at Foreign Currency Direct plc by calling straight through to our trading floor for free on 0800 328 5884 or if calling from abroad on 0044 1494 725353 alternatively you can email me directly on trh@currencies.co.uk