Good Evening All;
The pound is expected to halt its rally against the dollar, which is expected to stay strong this week, after Donald Trump was elected president.
Elsewhere, the euro is forecast to remain weak in the coming days, largely due to uncertainty surrounding an upcoming referendum in Italy and the presidential election in Austria.
Meanwhile, the New Zealand dollar’s outlook has been affected by the earthquake that took place over the weekend.
Pound expected to halt rally against USD
The British pound has seen a recent rally against the USD following the US presidential election result. However, many analysts are predicting that it will fade slightly this week. Having had a soft start to the week’s trading against the dollar, the pound is unlikely to extend its good performance.
Sterling is largely expected to capitalise on a soft euro, however, and trade well against it. This morning (14 November) had already seen a slight gain for the pound against the euro.
Bearish outlook expected for Euro
A bearish outlook is expected for the euro, particularly against the pound and the dollar. Analysts are blaming the forecast for the euro on investors worrying about relations between the eurozone and the US.
Political uncertainty is largely to blame for the euro’s expected performance. Italy is holding a constitutional referendum on 4 December and Austria will have a presidential election on the same day.
Austria’s anti-European Union (EU) Freedom Party’s candidate Norbert Hofer is ahead in the polls. It is thought that his election could lead to further instability within the EU.
USD hit nine-month high in Asian trading
The US dollar has hit a nine-month high in Asian trading this morning following the surge it has experienced since Donald Trump’s election as the next president and a brief but significant drop in its value.
Some analysts expect the dollar to fall this week, but if this does happen, it is not predicted to be a large drop in value.
Analysts have said that if the dollar performs well this week, it will be the result of an expected interest rate increase in December – something that has been speculated over for many months.
US Federal Reserve chair Janet Yellen will give testimony to Congress on Thursday. Her speech will be carefully analysed for signs of the interest rate rise.
Slight drop for NZD
Over the weekend, an earthquake hit New Zealand’s South Island, with a second coming overnight. It has resulted in a slight drop for the NZD. The fall was limited largely because the timing of the initial earthquake allowed investors time to gather information before reacting.
Analysts do not expect that the impact of the earthquake will be high. However, some experts have said that if economic confidence does fall as a result, it could then increase the chances of the Reserve Bank of New Zealand cutting interest rates further.
However, the fact that little damage was sustained to the country’s major urban centres will likely result in any economic effect being limited.
Enjoy your week.