Lloyds Exchange Rate Forecasts at Start of the Second Quarter of 2015

Researchers at Lloyds Bank have released their latest currency forecasts.

Forecast table and figures at end of article.

The update from the UK bank includes:

• Lowering the near-term pound dollar forecast, but confirming the British pound will rally into the end of 2015. For a full report on this, please visit here.
• The pound / euro exchange rate should rally to above 1.40. For the full report please see here.

Other key currency predictions:

Euro Dollar: “We see scope for a modest recovery in EUR/USD over the medium term. The extent of EUR short positioning suggests a lot of bad news is priced in. If, as we expect, EUR tail risks fade and the Euro area economy improves this should trigger a squaring of EUR short positions and support a EUR recovery.”

Australian Dollar: “With the FOMC expected to tighten US monetary policy in September, and the RBA pressing for a lower exchange rate to help re-balance the economy, there is scope for further downside in AUD/USD.”

Canadian Dollar: “Continued USD optimism and the possibility the BoC eases policy further should keep USD/CAD well supported. We forecast the pair to rise to 1.30 over the coming quarters.”

New Zealand Dollar: “We believe the combination of heightened speculation of RBNZ policy easing and increasing USD optimism should maintain the downside bias in NZD/USD. We forecast the pair to reach 0.70 by Q3.”