Commerzbank Exchange Rate Forecast Update: GBP, EUR, USD, AUD and CAD

After a four month period that has seen key currency market trends of the last year go into reverse, calling a halt to the Euro's rally and picking the US Dollar up off the floor it had been pinned to, the latest forecasts from Commerzbank suggest the greenback rally has further to run and yet more weakness is in store for Europe's single currency.

Currency markets have reached an inflection point at which key trends of the last year or more have been called into question although, according to the latest forecasts from Investec Bank, the eight weeks to the end of April are merely just a blip for currency markets and the global economy. 

Currency markets have reached an inflection point at which key trends of the last year or more will either be dashed upon the rocks of a global economic slowdown or continue unabated following a period of consolidation, according to the latest forecasts from J.P. Morgan. 

Kicking the “cliff edge” can down the road should spell welcome relief for the Pound while strong fundamentals may offer the Dollar some respite. However, extreme bullishness threatens to leave the Euro with a hangover.

Not even a restless Bank of England can save the Pound from renewed weakness this year, while the Euro also faces headwinds in the short term, leaving the US Dollar as winner this quarter and next.

"As GBP/USD rose through $1.4150 and GBP/EUR headed up towards €1.15, USD and EUR buyers were tempted to top up hedging levels, with the GBP/USD rate at post Brexit highs."

Pound Sterling is set to edge higher against the Euro in 2018 and risks are to the upside, according to Danske Bank analysts, who warn EUR/GBP could break "considerably lower". 

Change will remain a continuing theme as far as G10 currencies go in 2018, or so Morgan Stanley forecasts appear to suggest.