With QE unwinding and real interest rates rising, the seeds have been sown for a Dollar rally in 2014, says Daragh Maher, FX Strategist at HSBC. He also sees drama ahead for the Sterling and Euro.

SHOWS: LONDON, ENGLAND, UK (REUTERS - ACCESS ALL) (JANUARY 2, 2014)

1. SOUNDBITE (ENGLISH) FX STRATEGIST, DIRECTOR, HSBC, DARAGH MAHER, SAYING:

JOURNALIST ASKING DARAGH MAHER: 'Now, Daragh, I know that you think 2014 is going to be a good year for the Dollar but which crosses should investors be looking at?'

DARAGH MAHER: 'I suspect we're going to see most of the drama against the Euro and against Sterling because they've been two of the currencies really in the second half of 2013 that I think performed better than many people anticipated. And so I think that's where you look for the biggest reversal, that's where, if you like, the starting points are in place. I mean, for example, we've got 1.28 for year-end on Euro/Dollar; we've got 1.50 for year-end on Cable. So I think there are two pretty sizable moves from current levels.'

JOURNALIST: Now, the interesting thing about Cable as well is we've got the market aggressively pricing in rate hikes sooner than later, we've got the Bank of England still sounding dovish. Which camp are you in?

DARAGH MAHER: 'Well, I got to admit, I'm in the camp of the Bank of England to an extent. I mean at the moment now, we've got a high price to more or less the end of this year by the market. And I'm not convinced the Bank of England are convinced of the merit of that at this point. They've tried to be flexible on the employment level. So I think they'll want to lay down, unless of course the economy's in super performance, but I don't think will that wages growth, I don't think we're going to have the ingredients in place for some kind of explosion of the UK growth. So yeah, I'm in the bearish Sterling camp as a consequence.'

JOURNALIST: 'Also, we've got the PMIs today and also the ISM. What are you expecting that to show?'

DARAGH MAHER: 'Yeah, it's a funny day, isn't it because we've got this gap between New Year's and really when the market begins in earnest on Monday.'

JOURNALIST: 'And today's pretty artificial, isn't it?'

DARAGH MAHER: 'Should be, should be. But these are pretty key numbers. The UK PMIs have been very strong and really, I think somewhat at odds with what we've seen in terms of the UK manufacturing data, the survey has been stronger than a hard number. And in the US, of course, the ISM at this kind of level, although we're looking for a small retracement today would still be consistent with pretty strong growth and ongoing tapering and I think Dollar strength.'