Report Overview
This report will discuss the issues that could affect exchange rates on the currency markets today:
- USD Exchange rate forecast
- Euro rate forecast
- Canadian GDP data and forecast
The table below shows the difference in currency you would have been able to purchase buying at the high compare to the low this month on a £200,000 currency transfer:
| Currency Pair | % Change | Difference on £200,000 |
|---|---|---|
| GBPUSD | 4.6% - Month High | $13,860 |
| GBPEUR | 3.2% | €7,586 |
| GBPCAD | 5.4% - Month High | CAD 16,640 |
US Dollar exchange rate forecast
Sterling is currently sitting close to a 5 month high against the US dollar and as a result is presenting excellent buying opportunities for anyone with USD requirements. The key data to look out for today is US Gross Domestic Product figures (GDP), out at 13:30. This shows the growth or contraction in the US economy and is expected to post an annualised growth of 2.5%, which would be a fall from last months 2.7%. 
The graph above shows US GDP over the last 2 years, as you can see there is a downward trend in the last quarter.
The output fall does not bode that well for the greenback, and could lead to current exchange rates for GBPUSD improving. There have been concerns of a slowdown in the US amid fears of a double dip recession. However, as sentiment has fallen in the states there is an expectation of a poor figure. Do bear in mind that better than expected figures could cause some USD strength. If you have a USD requirement, let you account manager know so that you can take advantage of any favourable movement.
Euro Exchange Rate Forecast
Sterling euro exchange rates fell yesterday by about 0.6%, but we are still trading about 1.6% above the month low. The main market mover today for GBPEUR looks set to be European unemployment, out at 9am. Expectations are for 10% unemployed, a relatively high figure compared to the UK’s 7.8%. This could lead to some euro weakness as the high figure may lead to further scrutiny of the eurozone economy. I expect to see Sterling push through the 1.20 interbank level today.
Sterling Canadian Dollar Forecast
The Canadian dollar has gained 11.6% againt sterling in the last 12 months, as comodity based economies have seen increased demand for their currencies. However, the pound has fought back in the last 2 months, and is up 8% from lows in May. Today at 13:30 we have Canadian GDP figures for July, expecting to show a 0.2% increase from last month.
There have been concerns that reduced demand from the US could impact on the canadian economy and this may reduce the chance of interest rate hikes in Canada. I’m expecting to see sterling make gains against the CAD, as I think currency speculators will compare the low GDP figure tomorrow to the UK’s 1.1% growth announced last week.
How to take advantage of exchange rate spikes
Many clients monitor interbank exchange rates on a regular basis, which is always a useful way of getting a feel for market movements. However, it is important to ensure that you are in a position to book a rate, be it on a forward basis or on spot, if the market does move in your favour. Spikes may only last for a short space of time, so to reduce the chance of missing out, the most imporant things to ensure you have organised are:
1) Registered your account with Foreign Curency Direct
http://www.currencies.co.uk/registration.aspx
2) Ensure your funds are accessible (usually from your current account) for a forward deposit, or spot contract
3) Make your account manager aware of your requirements on 0800 328 5884, so that you can discuss the options open to you
