UPDATE
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate was trending within a narrow range on Tuesday morning, whilst the Pound Sterling to New ZEaland Dollar (GBP/NZD) exchange rate rallied by around 1.1%.
As traders await UK inflation data the Pound advanced versus nearly all of its major peers. This is because the combination of low fuel prices and a weak GBP should support inflationary growth.
Meanwhile, both the Australian Dollar and New Zealand Dollar shed yesterday’s gains amid concern that the program of stimulus initiated by the People’s Bank of China (PBoC) will not be enough to prevent an economic slowdown. Whilst yesterday’s Yuan fixing caused risk appetite to return it was still considered on the weaker side of market expectations. The ‘Aussie’ (AUD) avoided a larger depreciation, however, following the publication of Reserve Bank of Australia (RBA) meeting minutes which showed policymakers are happy to hold off from easing policy at this time.
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is currently trending in the region of 2.0248.
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate is currently trending in the region of 2.1964.
Yesterday….
Pound Sterling to Australian Dollar (GBP/AUD) Conversion Rate Predicted to Hold Losses despite Rising UK House Prices
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate dived by around -0.7% on Monday afternoon.
With the forthcoming European Union referendum weighing heavily on investor confidence, the British Pound has struggled versus its major peers for a considerable period. Whilst Prime Minister David Cameron attempts to convince Eurozone ministers to accept proposals which include dramatic changes to benefits for EU migrants in the UK, many analysts speculate his efforts will be in vain. This is evidenced by strong opposition to reforms from many EU officials not happy that the UK could potentially have separate rules from other EU member states. Should Cameron fail to implement meaningful reforms, those in favour of staying in Europe will be dealt a blow which will be hard to recover from.
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is currently trending in the region of 2.0234.
On the other side of the globe, the antipodean ‘Aussie’ (AUD) rallied versus its major peers. This was following news from the People’s Bank of China (PBoC) regarding intervention in the form of the highest Yuan fixing in three months. This saw heightened demand for high-yielding, risk-correlated assets such as the ‘Aussie’. Also supporting demand for the South Pacific currency was positive domestic data. Australia’s New Motor Vehicle Sales bettered previous growth on both a monthly and annual basis in January. An unexpected contraction in China’s imports in January has somewhat anchored ‘Aussie’ gains, however, despite China’s trade surplus bettering estimates.
Pound Sterling to New Zealand Dollar (GBP/NZD) Conversion Rate Predicted to Hold Losses ahead of New Zealand’s Retail Sales Data
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate softened by around -0.6% on Monday afternoon.
Although the Pound softened versus most of its major peers today, positive domestic data eased the depreciation somewhat. Rightmove House Prices bettered previous growth in February on both a monthly and annual basis. Rightmove director Miles Shipside stated: ‘The new year’s market has hit the ground running in many locations, continuing last year’s momentum and resulting in the price of property coming to the market hitting a new high. Many agents reported high numbers of sales in November and December and properties selling more quickly, so it’s encouraging to see signs of replenishment of property, especially in the first-time buyer sector.’
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate is currently trending in the region of 2.1721.
Much like its Oceanic neighbour, the New Zealand Dollar advanced versus most of its major peers on Monday in response to intervention from the PBoC. Additional support can be linked to January’s Non Resident Bond Holdings which edged higher from 67.4% to 67.6%. Whilst both South Pacific assets have gained in response to improved risk-appetite, the appreciation could prove short-lived if the US Dollar continues to advance in response to cool demand for funding assets. Additionally, the ‘Kiwi’ (NZD) is likely to see significant volatility in response to dairy prices with the current low price of whole milk powder having a significantly detrimental impact on New Zealand’s most important industry.
Pound Sterling (GBP) Exchange Rate Forecast: British Inflation Data in Focus
Given the absence of further British economic data to provoke volatility, and with safe-haven demand showing little sign of a swift recovery, the Pound Sterling to Australian Dollar and New Zealand Dollar exchange rates will be very likely to hold losses for the remainder of Monday’s trade.
Tuesday should see significant GBP volatility in response to the publication of January’s UK inflation data. Bank of England (BoE) inflationary projections have been significantly dovish, and the low level of consumer prices has been one of the main reasons the Monetary Policy Committee (MPC) have been committed to leaving monetary policy unadjusted.
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate was trending within the range of 2.0194 to 2.0412.
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate was trending within the range of 2.1675 to 2.1909 during Monday’s European session.
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