Travelex's Jones Says Pound Will Rise to $2.1 `Fairly Soon'

Matthew Jones, foreign-exchange strategist at Travelex Australasia Group in Sydney comments on the dollar, pound, euro and Australia's currency.

``You would have to be very brave to buy the dollar at these levels. It's been a one way street. I'd be selling the dollar. Virtually everything is at multi-decade highs and there's no reason why it can't continue.

``I like the pound. I'm seeing a target of $2.1 we should see fairly soon. You can't go far wrong with the euro either. It's very hard to pick a top but $1.5 is achievable in the current environment.

``I tend to think the Fed will stand pat for a while. Oil is a big concern for the U.S. at the moment and that is going to push inflation up. They've acted early so hopefully they won't have to cut as far in the future.

``With the U.S. slowing, it's going to put some breaks on the euro economy as well. I can't see the ECB taking much more action. Possibly one more raise early next year.

``The Bank of England is meeting this week and I can't see them acting. It's not so much interest rates driving currencies now as current sentiment in the U.S. Payrolls came out twice what was expected but the dollar still fell.

``The Japanese economy is running on two lines. Business spending is good and exports are strong but the consumer is still weak. There won't be a rate hike in Japan until the consumer starts to spend more.

``A lot of our customers are standing on the sideline here in Australia expecting a rate hike. That will help the Australian dollar push up through the 93 cent level and past the recent high we've seen.

``With the current state of the economy and the expected interest rate hikes, we should see the Australian dollar gain a lot of strength in the next few months.''

To contact the reporters on this story: Catherine Yang in Hong Kong at cyyang@bloomberg.net ; David McIntyre in Sydney at dmcintyre2@bloomberg.net