Lloyds Bank reassert year-end forecast for euro dollar exchange rate

The call comes on a day that has shown just how robust the euro is proving in the face of market weakness.

The Lloyds Bank Commercial Bank team tell clients:

"Our end 2013 and end 2014 EUR/USD targets remain at 1.25 and 1.20, respectively. GBP/USD is forecast at 1.49 and 1.46, and USD/JPY at 107 at both end 2013 and end 2014. However, we have lowered our AUD/USD target to 0.90 at end 2013, reflecting both current levels and downgrades to our Australian growth and interest rate forecasts."

The forecast table can be seen here.

Commenting further on their euro exchange rate forecast Lloyds Bank say:

"The euro has been supported by an improvement in survey data and firmer inflation in May, helping to scale back expectations of further monetary loosening. EUR/USD briefly scaled 1.33, from below 1.28 in mid-May.

"However, the risks to the economic outlook remain significant, with at best a gradual recovery forecast in H2 2013, amid divergent performances across the member countries.

Credit fragmentation represents a major headwind to recovery in the periphery economies, and the June EU leaders’ summit and forthcoming ECB meetings could have a significant sway on the outlook for the euro.

"The recent sharp rise in market interest rates also adds to strains. On balance, we expect a weak recovery, renewed speculation of monetary easing and slow progress on reforms to weigh on the euro in the year ahead. We forecast EUR/USD at 1.25 at end 2013 and 1.20 at end 2014."