British Pound Sterling: Currency to fall further against US Dollar says UniCredit exchange rate forecast

Last Updated on Friday, 27 January 2012 12:15 Written by Rob Samson Friday, 27 January 2012 12:13

Once the euphoria is over we should also see the euro dollar exchange rate retreating once more.

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British Pound Sterling (GBP) in Euro (EUR): GBPEUR is 0.13% lower at 1.1958.

British Pound Sterling (GBP) in US Dollar (USD): GBPUSD is 0.1% higher at 1.5708.

British Pound Sterling (GBP) in Canadian Dollar (CAD): GBPCAD is 0.07% lower at 1.571.

Analysts at UniCredit have today, in a weekly exchange rate forecast, suggested that there is more pound dollar weakness to come, this due to a poor UK economic outlook in comparison to an early bottom-building in the US.

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Essentially, the US economy is looking healthier than that of the UK, and this most fundamental of differences will likely prove supportive of the US dollar.

The exchange rate forecast note also suggests that the euro dollar exchange rate downtrend is set to continue.

This after a good week for the euro that saw it recovering the 1.3 level.

The UniCredit note says:

"The EUR-USD rally above 1.30 in the wake of the FOMC outcome should prove temporary and a downtrend towards 1.20 and even below should resume once the post-Fed euphoria is over.

"Given our steady USD-JPY outlook, EUR-JPY will steadily bear the brunt of the EURUSD fall, while EUR-GBP should suffer a bit less due to a weaker cable. The SNB commitment to pursue a weaker CHF still points to a higher EUR-CHF, but not above 1.28."