This is as Good as it Gets for Pound to Euro Exchange Rate Show Lloyds Bank Forecasts

This is as Good as it Gets for Pound to Euro Exchange Rate Show Lloyds Bank Forecasts


One of the UK’s best-known high-street lenders has reaffirmed their view that Sterling is unlikely to advance further than current levels against the Euro.

Euro

Pound to Euro Latest

1.1812▲

0.25%

Previous Close:

1.1782

Today's High:

1.1817

Today's Low:

1.1769

US Dollar

Pound to US Dollar Latest

1.2898▲

0.39%

Previous Close:

1.2847

Today's High:

1.29

Today's Low:

1.2837

Australian Dollar

Pound to Australian Dollar Latest

1.7234▲

0.27%

Previous Close:

1.7187

Today's High:

1.7236

Today's Low:

1.7167

New Zealand Dollar

Pound to New Zealand Dollar Latest

1.8665▲

0.13%

Previous Close:

1.8641

Today's High:

1.8668

Today's Low:

1.8591

South African Rand

Pound to South African Rand Latest

17.0782▲

0.14%

Previous Close:

17.0539

Today's High:

17.0785

Today's Low:

16.9419

Canadian Dollar

Pound to Canadian Dollar Latest

1.7478▼

-0.09%

Previous Close:

1.7494

Today's High:

1.7542

Today's Low:

1.7409

The British Pound has a Confidence Problem

Pound sterling today

The pound sterling has a sentiment problem while the US dollar finds its employment report rally short-lived.

The Sunday papers astonished readers yesterday with the revelation that rich people use the tax haven, Panama, as a tax haven.

The really breathtaking bit was that 1.5m documents were stolen by a whistleblower.

Even on the cheapest paper that's 7.5 tons. What could the doorman have been thinking?

The weight on sterling was even greater than that at the end of last week, making the pound Friday's worst-performing major currency by quite a margin.

Thursday's UK data had shown greater-than-expected economic expansion in the fourth quarter of 2015, 0.6% instead of 0.5%, and strong mortgage approvals.

On Friday morning Nationwide's index put house prices 5.7% higher on the year and the manufacturing sector purchasing managers' index came in 51.0, shy of the predicted 51.2 but two ticks better on the month.

There was nothing among those figures to provoke a sterling sell-off.

So it must have been sentiment that sent it lower, because the pound lost an average of -0.8% on Friday - one euro cent - to the other dozen most actively-traded currencies.

The Brexit threat continues to loom over sterling.

On the week and the month it has fallen by an average of -1.4% and -2.6%, its only gains being against the US dollar.

Construction PMI in Welcome Beat of Expectations

The new week got off to a decent start for sterling as UK construction companies indicated a sustained upturn in overall business activity during March.

The Markit / CIPS Construction PMI read at 54.2, better than the 54.0 forecast and unchanged on the previous month’s reading.

Looking ahead, the majority of survey respondents (51%) expect a rise in business activity at their units over the next 12 months, while only 11% forecast a reduction.

So it would appear that the EU referendum is not weighing too heavily on this sector.

The Evolving Brexit Story Part 1

According to a survey of 120 UK CFO’s the biggest primary business risk remains Brexit. According to the poll 75% of those polled viewed remaining in the EU as preferable, this compares with 62% in Q4 ’15.

Although business is increasingly fearful of the risks of exit, the latest opinion poll from the Observer newspaper puts the Brexit campaign ahead with 43% deemed to be supporting exit as opposed to 39%, albeit 18% remain in the don’t know camp.

It will be that latter group that will likely decide the result of the poll. However, the anti-Brexit campaign has to mobilise young voters, those who are often reluctant to vote, unlike more exit orientated older voters.  Unless the young can be persuaded to vote the risks of Brexit are likely to continue to advance.

In the light of the opinion polls and a record Q4 current account shortfall this risks ongoing discussion of  investor flight, in the process bedeviling Sterling.

Expect this to be especially the case should services PMI fail to rebound in March; the February reading of 52.7 was the lowest since March ’13. We would favour GBP USD testing towards 1.4110/20.

The Evolving Brexit Story Part 2: Brexit and a Sovereign Downgrade

Standard & Poor’s has repeated its earlier warning that Britain could lose its much-prized AAA rating if the country votes to leave the European Union.

Writing an opinion piece on the Politico website, S&P’s chief sovereign ratings officer Moritz Kraemer said:

"Brexit would further polarize the U.K.’s political system, increase risks to effective, transparent and predictable policymaking, and diminish the U.K.’s long-term sovereign creditworthiness. Brexit also heightens potential risks to economic growth and the balance of payments, as well as domestic political threats to territorial integrity.

"Consequently, a vote for “Leave” would likely lead Standard & Poor’s to lower the U.K.’s AAA rating — a rating it has held, without interruption, since 1978. While the U.K.’s rating would likely remain high given its many institutional, financial and economic strengths, the U.K. would lose its place in the increasingly exclusive club of AAA-rated sovereigns."

US Labour Market Data Helps the Greenback

Friday's US ecostats were helpful to the dollar but, except against the pound, their effect was fairly short-lived.

Good as they were, they were not enough to make any real difference to the perception that the Federal Reserve is nervous about spoiling the economic picture with a too-hasty rate increase.

Nonfarm payrolls beat forecast by 10k, increasing by 215k in March, and average hourly earnings increased by a worthwhile 0.3%.

The two manufacturing PMIs either met or exceeded forecast and consumer confidence looked okay at 91.0.

In 90 minutes the dollar strengthened by a cent against the euro, only to give back more than half of that gain before the end of the day. Although market expectations for Fed policy vary almost by the week, Friday's data failed to make a case for higher rates in the near future.

Oil down, yen up

Reasonably or not, the current logic has it that lower oil prices do not just reflect, but actually cause economic weakness, increasing demand for safety. That seemed to be the case over the weekend, when the yen strengthened by 1.5% as the price of oil fell -4%.

The Australian dollar was one of the poorest performers, partly as a result of that general concern but also because of disappointing Australian retail sales, which were flat in February. The sales data on their own cost the Aussie a cent this morning.

Other data today cover Euroland unemployment and investor confidence, Britain's construction sector PMI and US factory orders. The Bank of Canada governor will be speaking this afternoon.

Watch out too for the thorny matter of Greek debt, which threatens to raise its ugly head again as bailout talks recommence.


* The 3% improvement on the exchange rates offered by a high street bank is based on an exchange rate comparison for a telephone transaction of £100k into Euros between Moneycorp and HSBC, Natwest, Barclays, Lloyds Bank, Royal Bank of Scotland and Bank of Scotland International Banking taken 7 times between April and November 2015. Moneycorp’s average margin for this period was 3.08% better than the combined average margin for the banks.

Latest British Pound News

GBP LIVE TODAY

Deutsche Bank Release Upgraded Forecasts for Pound vs Dollar and Euro, Shows Outlook Finel…

25 April, 2017 |

Putting it all together, Deutsche Bank’s new Sterling forecast reflects a more optimistic view of the Brexit endgame, but not of Sterling fundamentals.

GBP LIVE TODAY

Election is no Game Changer for Pound Sterling say Crédit Agricole

21 April, 2017 |

The outlook for the Pound rests heavily on decision-making at the Bank of England where there is apparently little scope for a hawkish shift.

GBP LIVE TODAY

Upgrades to Pound Forecasts are Coming say Credit Suisse

20 April, 2017 |

Credit Suisse are the latest big-name in institutional research to say they are to revisit their forecasts for the British Pound.

GBP/EUR: News and Forecasts

EUR

Pound to Fall Below 1.1364 Euros Sometime in the Next Three Months

27 April, 2017 |

Credit Suisse have taken a conviction line on their forecast for the Pound to fall against the Euro by announcing a trade recommendation that seeks to take advantage of the decline.

EUR

This is as Good as it Gets for Pound to Euro Exchange Rate Show Lloyds Bank Forecasts

27 April, 2017 |

One of the UK’s best-known high-street lenders has reaffirmed their view that Sterling is unlikely to advance further than current levels against the Euro.

EUR

Outlook for the Euro Firming says Helaba's Umlauf

26 April, 2017 |

The outlook for the Euro against two of its major counterparts is looking ever more positive, says Helaba economic advisory service’s Ralf Umlauf.

EUR

EUR to GBP Outlook: 'Pivot Pressure' Suggests Sideways Near-Term but Higher Longer-Term by…

26 April, 2017 |

EUR/GBP is tipped to head sideways in the short-term, however a technical analyst at one of the UK’s best-known financial brands believes the Euro should win out longer-term.

GBP/USD: News and Forecasts

USD

No Boost for Dollar as Trump Releases Tax Plans Scant on Detail

26 April, 2017 |

The big event of the day for foreign exchange markets was the release of the US administration’s proposed changes to the US taxation system.

USD

Reagan Offers a History Lesson for the Dollar when it Comes to Tax Cuts

26 April, 2017 |

US tax cuts are likely to come with a hefty price tag, which will eventually weigh on the Dollar, argues HSBC’s David Bloom.

USD

US Dollar Peaking Against Western European Currencies: Soc Gen's Juckes

26 April, 2017 |

Regardless of what president Trump announces in his tax reform speech today, the Dollar is probably peaking versus western European currencies, says Société Générale’s Kit Juckes.

USD

GBP/USD Might Have Peaked, Watch Trump Tax Plan for Surprises

26 April, 2017 |

Ahead of an important event for the US Dollar and global stock markets, we see the Pound to Dollar exchange rate (GBP/USD) consolidate.

EUR/USD: News and Forecasts

Euro to Dollar

Will the ECB Cool the Euro Rally?

27 April, 2017 |

Following a good run for the Euro over recent days markets will take their next cue on where to send the shared currency from the European Central Bank who today conduct their April 2017 policy meeting.

Euro to Dollar

"The Fundamental Picture for the Euro is clearly for Upside"

25 April, 2017 |

Analysts at Nomura have told clients they believe positive fundamentals continue to underpin the Euro exchange rate complex and markets are yet to fully accept the European recovery story.

Euro to Dollar

The EUR/USD Exchange Rate Could Hit 1.12 on Macron’s 1st Round Win

23 April, 2017 |

The Euro exchange rate complex has risen following news Emmanuel Macron is headed for the Elysee Palace and should head even higher says one analyst.

Euro to Dollar

The Euro to US Dollar Rate's Forecast for Next Five Days

23 April, 2017 |

With the start of a new trading week, we take stock of the EUR/USD exchange rate and discuss possible options for its evolution.

GBP/AUD: News and Forecasts

AUD

Australian Dollar Outlook Negative and Latest Inflation Data Doesn't Help

26 April, 2017 |

The Australian Dollar lost over 0.80% versus the US Dollar after the release of inflation data showed price growth undershot analyst’s expectations in Q1.

AUD

Buying the Pound and Selling the Australian Dollar: A ‘Long Trade’ that Keeps Giving

25 April, 2017 |

“Sterling’s recent rally has supported a total gain of about 6% in our long GBPAUD trade since we initiated on 23 March,” says Hamish Pepper at Barclays.

AUD

Iron Ore, Australian Dollar to Receive Short-Term Boost on Cyclone Debbie

24 April, 2017 |

The Australian Dollar continues to trade in a sideways range in most pairs, but in the short-term at least it could get a back-draught from the weather.

AUD

Pound's Upside Progress Against Australian Dollar Could Be Capped in Coming Week

23 April, 2017 |

The Pound to Australian Dollar rose strongly in the previous week after Theresa May’s announcement to hold an election in June but it has now reached uncomfortably close to a level which is likely to cap future progress higher.

GBP/NZD: News and Forecasts

NZD

Pound Extends Gains Against New Zealand Dollar, seen at Fresh 8-Month High

25 April, 2017 |

The New Zealand Dollar was seen as the worst-performing G10 currency on Tuesday April 25.

NZD

Pound Forecast to Extend Advance on New Zealand Dollar

23 April, 2017 |

The GBP/NZD pair is looking particularly bullish at the start of a new trading week.

NZD

New Zealand Dollar is the Star Performer as NZ Inflation Jumps

20 April, 2017 |

Currencies tend to move higher when inflation moves higher. This rule was applied to the New Zealand Dollar on April 20 when it jumped in response to news New Zealand’s annualised inflation rate had jumped to 2.2%.

NZD

Pound Enters New Uptrend Against New Zealand Dollar after Piercing Major Trendline

19 April, 2017 |

After breaking through a major trendline the GBP/NZD pair looks poised to extend higher and start a fresh bull trend.

GBP/CAD: News and Forecasts

CAD

Pound Living on ‘Borrowed Time’ Against Canadian Dollar

26 April, 2017 |

The Pound to Canadian Dollar exchange rate (GBP/CAD) trades near fresh 8-month highs having touched 1.7450 this week.

CAD

Pound Could Extend Gains Against Canadian Dollar in Coming Week, but Looking Increasingly …

23 April, 2017 |

The Pound to Canadian Dollar (Loonie) rose more than any other G10 Sterling pair last week, however, we now look to the charts for guidance on the week ahead.

CAD

Canadian Dollar: Better Times Ahead

20 April, 2017 |

"We think that the downward correction will not last long and may represent buying opportunities over the medium term"

GBP/ZAR: News and Forecasts

ZAR

GBP/ZAR Gaps Lower in Exhaustion Move – Recovery Expected

24 April, 2017 |

The Pound to South African Rand has gapped down on Monday morning due to market relief at the outcome of the first round of the French presidential election, however, it is tipped to recover my market technicians.

ZAR

South African Rand Looks to Establish Uptrend Once More

21 April, 2017 |

The Rand is one of the strongest currencies against the Pound in a landscape otherwise dominated by Sterling strength at the expensive of counterparts.

ZAR

GBP/ZAR – Uptrend Still Intact Despite Sell-Off to 16.70s

18 April, 2017 |

The Pound to South African Rand has fallen to the 16.70s -  below the target of 16.80 we stipulated in our midweek review, there is still a chance the pair may rebound higher again.

ZAR

GBP/ZAR: Midweek Review, Pulling-Back to 16.80

12 April, 2017 |

GBP/ZAR has formed a short-term top and is currently breaking lower.