Exchange Rate Forecasts

"We believe this is a temporary comeback, but uncertainty is high and conviction low" - Swedbank.

Nomura adds a short position on GBP/USD to its strategy portfolio in anticipation of a consensus-beating fall in UK inflation expected to be announced next week.

"All this is likely to keep the US dollar supported for a while longer" - XM.com.

Matthew Weller, Global Head of Research at FOREX.com, reports that the U.S. dollar is experiencing a rise against all major rivals, including the Euro, despite the absence of significant U.S. economic data.

Jefferies is looking for a stronger Dollar into year-end as a global slowdown and as U.S. funding issues drive demand for the U.S. unit.

ABN AMRO has upgraded its forecast for the British Pound against the Euro and Dollar expecting the Bank of England to be less "dovish" over the coming months than the ECB and Fed.

Pound Sterling has likely peaked against the Euro and is pointed lower as the Bank of England has already ended its interest rate hiking cycle in the face of softening economic data.

The Australian Dollar will this week remain at risk of further weakness in global commodity prices, however, a busy domestic calendar will also provide some potential volatility in the Pound to Australian Dollar exchange rate (GBP/AUD).

GBP/NZD is trading back at the psychologically important 2.0 level at the start of a new week which could see the Kiwi currency resume some of its 2023 underperformance.

GBPNZD has recovered the psychologically significant 2.0 level ahead of the weekend but peaking Bank of England rate hike expectations and a slowing economic data pulse could mean fresh 2023 highs are out of reach in the near term.

70% chance the Bank of England hikes and keeps guidance unchanged, 20% chance a halt to the cycle is signalled = 90% chance the Pound falls today.

Analysts at Goldman Sachs have upgraded their tactical stance on the British Pound to "outright constructive" amidst a surprising UK economic resilience and fading central bank divergence risks.

The Canadian Dollar should trend stronger against the Euro and British Pound into year-end while remaining range-bound against the U.S. Dollar as Canada benefits from a strong banking sector and elevated immigration.

Our bullish GBP/USD forecast is unlikely to change much.

GBPUSD hit a new one-year high at 1.2668 at the start of the week but technical analysis reveals it is looking stretched ahead of a key U.S. inflation release and Thursday's all-important Bank of England decision.

Investors are being told to position for further spasms in the U.S. regional banking space, a development that could lead to further declines in some equities, bonds and the Dollar.

AUD will remain an underperformer in global FX, despite the gains it made following this week's surprise Reserve Bank of Australia (RBA) interest rates rise.

The British Pound has come under pressure against the Euro in May as investors bet Thursday's European Central Bank (ECB) interest rate decision and guidance will see it maintain its crown as the most hawkish of the major central banks.

The EUR/USD is clearly going to be in focus this week with both the Fed and ECB rate decisions to come ahead of U.S. non-farm payrolls report on Friday.

EUR/USD has peaked and will likely trend lower over a three-month horizon, before rebounding strongly over the 12-month horizon.