Exchange Rate Forecasts

"Dollar bears, surfing a wave of easy Fed policy, are running out of time. If the US can escape the clutches of the zero-rate bound, it will earn itself a significantly stronger dollar," says Kit Juckes, Macro Strategist at Société Générale.

The Euro-to-Dollar exchange rate has held above 1.18 but could be at risk of slipping back to April’s lows around 1.17 over the coming days if minutes from last month’s Federal Reserve (Fed) meeting provide investors with cause to further reduce earlier bets against the greenback.

"We have not had much opportunity to laud sterling's performance over the past 5-years, but one cannot fault its efforts at the start of 2021." - Kamal Sharma, BofA.

The Pound-to-Dollar exchange rate enters the new week near to three-month lows and with minutes of June’s Federal Reserve (Fed) meeting threatening to keep the greenback on its front foot, Sterling could now face a battle to hold onto the under-pressure 1.38 handle.

The Pound-to-Euro exchange rate enters the new week close to one-month lows but with limited downside given a cluster of nearby support levels around 1.16, which underpins Sterling going into the release of the all-important May GDP report.

The UK's shifting trade relationship with the EU and the rest of the world could prove supportive for the British Pound according to new research from BMO Capital Markets, who say they continue to favour the Pound over the Euro from a strategic perspective.

Foreign exchange analysts at Barclays say they expect the New Zealand Dollar to make small advances in the second half of 2021, but a more notable acceleration is likely to be seen in 2022.

"Dollar strength creates tremors across markets," says Chris Beauchamp, Chief Market Analyst at IG, touching on the key global currency theme as the turn of month approaches.

The British Pound is expected to remain supported over coming weeks and months by analysts at Barclays, but they say a repeat of those rapid gains seen in early 2021 is unlikely.

The Pound-to-Australian Dollar exchange rate rose back above the 1.83 handle early in the new week but may struggle to sustain much of any further recovery ahead of July’s policy decision from the Reserve Bank of Australia (RBA) next week.

The Euro-to-Dollar exchange rate enters the new week with more work to do in order to draw a line under its June sell-off but with the market’s optimistic outlook for Federal Reserve (Fed) policy setting a high bar for further Dollar gains, the Euro could yet stabilise over the coming days.

The Pound-to-Dollar exchange rate enters the new week looking to stabilise near the lower end of a multi-month range but could be susceptible to any renewed recovery attempt by the Dollar after the Bank of England (BoE) neglected to give Sterling a pretext for extending its own 2021 gains last week.

The Pound-to-Euro exchange rate enters the new week closing in on nearby support levels which could break its fall over the coming days after being dislodged from near April highs by a show of patience from the Bank of England, which could prove stifling for Sterling over the coming weeks.

Foreign exchange analysts at Wall Street investment bank JP Morgan have said they are reinstating their bullish forecasts on the U.S. Dollar in the wake of the June Federal Reserve (Fed) policy update.

BNP Paribas have named the British Pound their "idiosyncratic top pick" in a regular quarterly economic and strategic briefing, saying the UK's economy is likely to outperform its peers and allow the Bank of England to raise interest rates in August 2022.

The Euro is tipped to enter a 'bear trend' against the Dollar in the second half of the year by foreign exchange strategists at French investment bank BNP Paribas, although those holding euros will take heart from Eurozone consumer confidence that is approach record highs.

The Pound-to-New Zealand Dollar rate remained ascendant early in the new week and was close to printing one-year highs around 1.9950, which would yet be seen if either the U.S. Dollar rebounds further, or if Thursday’s Bank of England (BoE) decision provides Sterling with reason for cheer.

The Pound-to-Australian Dollar rate was trading close to one-year highs early in the new week and could benefit over the coming days from what has been a rising level of support, which now underpins the exchange rate a short distance below the 1.84 handle.

The Pound-to-Canadian Dollar rate could have scope to edge higher and as far as three-month highs over the coming days, although gains for Sterling could be cut short before long by what remains a bullish outlook for Canada’s Loonie.

The Euro-Dollar exchange rate is entering a thicket of noteworthy technical support levels, which could enable the single currency to stabilise at or above the 1.1825 level over the coming days after enduring its bloodiest week since March 2020.