Exchange Rate Forecasts

Despite a good week of data UniCredit forecast further pound dollar exchange rate weakness

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Published on Friday, 03 February 2012 12:09

Written by Sam Coventry

Exchange Rate Forecasts: This morning the British pound was boosted by news that the UK Services PMI came in higher than anticipated.

This caps off a good week of data readings, leading to signs that the UK may not enter a double dip recession after all.

This has seen the pound dollar exchange rate head higher by 0.14% to settle at 1.5826.

Currency analysts at UniCredit have, however, forecast pound dollar exchange rate weakness going forward.

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In a morning exchange rate forecast UniCredit say:

"More GBPUSD weakness to come due to poor UK economic outlook in comparison to an early bottom-building in the US."

The euro dollar exchange rate is also forecasted to weaken in line with a bearish outlook for the Eurozone economy.

"Downtrend to be continued due to persisting EMU-Sovereign crises and our assumption of a better performing US economy," say UniCredit.

With markets becoming increasingly impatient following six consecutive days of range-trading in EUR-USD, UniCredit would not rule out a test of the upside.

Without a PSI agreement, however, a delayed counter reaction is very likely.

EUR-CHF continues to offer a great buying opportunity at current levels, while the resumption of the BoE’s APP on Thursday could prevent further sterling strength. Another RBA rate cut might take some shine off the Aussie dollar.