Jump to content

What's your baht worth? Exchange rates on the street...


Painter

Recommended Posts

3 hours ago, Steelers4Life said:

The USD dollar is spiking in the right direction. (and quickly) 

Yes, CAD as well. I always look at the rates at bottom of 24/7, was stuck around 22.8, now up to 23.5. Not enough to book a flight, but good to know. 
 

P.S. It’s bloody sad that rates are so low that I’m quoting the decimal as well. Was never like that, we just said 29, 30, etc....

  • Thumbs Up 1
Link to comment
Share on other sites

The MPC will announce its latest interest rate decision at midday UK time. Seems to be no telling what they'll do, but I'm sure Mark Carney will be wanting to leave the job with yet another rate cut to his name.

Pound Sterling Predictions vs. Euro and Dollar ahead of Bank of England Decision

- GBP to go lower on a 'bearish' hold
- Can go higher on a 'hawkish'cut
- GBP relief rally to be short-lived say BofA

Key to the British Pound's near-term outlook will be the outcome of the midday interest rate decision announced at the Bank of England, an outcome which is too close to call and therefore offers the potential for heightened currency volatility.

Foreign exchange markets attribute a 50/50 chance of an interest rate cut, which leaves the Pound burdened by a degree of uncertainty and explains why it has traded with a softer tone over recent days.

The Pound-to-Euro exchange rate is flat at 1.1819 at the time of writing and the Pound-to-Dollar exchange rate is at 1.3015, as the key 1.30 support level continues to show its worth.

The general rule-of-thumb in the world of currencies is that when a central bank cuts interest rates, the currency it issues falls. At Thursday's meeting, because the market has sold Sterling as the odds of a rate cut have increased through the course of January, it therefore stands that the currency could recover in the event that the Bank keeps rates on hold.

"With market pricing for a cut finely balanced, this would suggest the risks to GBP through the MPC are asymmetric," says Kamal Sharma, FX Strategist at Bank of America (BofA).

But, anticipating the Pound's reaction is made a little more difficult in that nuances matter, and it might not simply be a case of a cut = a fall in the Pound, and a hold = a recovery.

The Bank will be offering communication and fresh economic forecasts which will have a bearing on the outlook and markets will therefore be afforded the chance to get a sense of what the Bank might do in future.

Currency markets are by nature forward-looking and it could ultimately be the overall tone of the event that matters, indeed we could see some counter-intuitive moves in the Pound.

 

Stephen Gallo, a foreign exchange strategist with BMO Capital says he is looking for the possibility of a "hawkish 25bps cut" or a "dovish hold".

In other words, the Bank might cut rates but signal that this is a one-off move as the outlook for the economy has improved somewhat. This could see Sterling go higher in relief. In addition, the market might display a typical "sell the rumour, buy the fact" reaction and recover some of the losses seen over recent days.

A 'dovish hold' would see the Bank keep interest rates steady, but signal that outlook is murky and release some soft forecasts and leave open the prospect of a cut at their next major meeting in May.

This scenario could well see Sterling fall as market pricing for additional interest rate cuts grow.

Link to comment
Share on other sites

×
×
  • Create New...