Exchange Rate Forecasts

The minutes from the last meeting of the US Federal Reserve revealed a continuing bias toward further rate rises, while also acknowledging that after 14 consecutive rises, the ledning rate now ” seemed close to what it needed to be given the current outlook”. The new Fed’ chariman has started his tentureship with some relatively [...]

German GDP for the 4th quarter was surprisingly low, coming in flat against expectations for a 0.2% gain. This brings their unadjusted anual rate to 1.0% from the 1.4% estimated in Q3. Commentators suggest this will not force the ECB to curtail their monetary tightening intentions, since the Euro economy is seen as gathering momentum [...]

Plenty of data today from both sides of the Atlantic, starting with UK December Trade Balance at 09:30, expected to show a deficit of £5.5bn versus November’s £6bn. We then have the Bank of England accouncement at midday, which is almost certain to result in no change in interest rates. The minutes of the meeting [...]

As expected, no surprises….manufacturing up 0.3% on the month vs expectations of 0.1%, but down 0.8% on the year for 2005. The data will not have any effect on Q4 GDP estimate of 0.6% that surprised to the upside a couple of weeks ago.

Sterling continues to suffer versus the Euro and Dollar, and this morning’s Industrial & Manufacturing Production data should give us a clear indication of whether the continued slide has been justified. GBPEUR – Support 1.4535, 1.4500 then 1.4350Resistance 1.4610, 1.4735 GBPUSD – Support 1.7400, 1.7315Resistance 1.7512, 1.7800

28 out of 30 economists polled by AFX news expect the ECB to raise rates by a quarter point in March after last week’s no change vote. Meanwhile, further speculation in the weekend press suggests that the UK will find it difficult to continue meeting growth expectations without a little help in the form of [...]