Disappointing Australian Wage Data Fails to Weigh on Australian Dollar (AUD) Today
Despite the latest Australian Wage Cost Index showing a slight slowing in wage growth the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate has remained on a downtrend on Wednesday morning. While the ongoing ‘Brexit’ debate is dragging on the appeal of the Pound (GBP), however, the Pound Sterling to New Zealand Dollar (GBP/NZD) pairing has been making some modest gains today.
‘Brexit’ uncertainty continues to dominate the outlook of Pound Sterling (GBP) today, pushing the currency lower against both the Australian Dollar (AUD) and New Zealand Dollar (NZD).
Pound Sterling (GBP) Trends Lower Across the Board as ‘Brexit’ Uncertainty Mounts
Demand for the Pound (GBP) was sharply weakened yesterday following the announcement of a date for the UK’s ‘Brexit’ referendum. Investors remain concerned about the downside implications of the uncertainty that surrounds the outcome of the vote, with the UK economy expected to see a decrease in investment over the coming months as pundits aim to insulate themselves from the impact of an exit. Confidence was further weakened by the news that London Mayor Boris Johnson had pledged his support to the ‘Leave’ campaign, a move that saw the odds of a potential ‘Brexit’ increased.
While Sterling’s movement is a little more muted today the softened currency remains on a broad downtrend against rivals. Comments from Bank of England (BoE) Governor Mark Carney as he is questioned by MPs have failed to offer any particular support for the Pound, with markets already assured of the likelihood that interest rates will remain lower for longer.
Weaker US Manufacturing Bolsters Appeal of Australian Dollar (AUD) Exchange Rate as RBA Seen on Hold
Improved stock market sentiment helped to drive up the Australian Dollar (AUD) on Monday, as base metal prices recovered somewhat and poor US manufacturing data weighed on the strength of the ‘Greenback’ (USD). With the Fed expected to maintain a more dovish outlook with regards to future monetary policy, traders appear to remain confident that the Reserve Bank of Australia (RBA) will hold interest rates at next week’s policy meeting. Although January’s Australian employment data proved rather disappointing investors have largely overcome the bearish influence of the report, as signs of strength in the domestic economy remain.
As the latest US Consumer Confidence Index is forecast to show a fresh decline in optimism within the world’s largest economy, the ‘Aussie’ is expected to gain further strength this afternoon. Overnight the fourth quarter Australian Wage Cost Index could also bolster the antipodean currency if it shows a continued robustness in wage growth.
New Zealand Dollar (NZD) Softer on Odds of Imminent RBNZ Rate Cut
A stronger New Zealand Credit Card Spending figure saw some measure of confidence return to the ‘Kiwi’ (NZD), with higher spending indicating a greater level of consumer optimism within the domestic economy. Reduced safe-haven demand equally shored up the New Zealand Dollar, with investors buying into higher-yielding assets amidst the continuation of the recent stock market rally.
However, with the Reserve Bank of New Zealand (RBNZ) expected to cut interest rates in the near future the appeal of the ‘Kiwi’ is still relatively limited. As markets have returned to slightly more jittery form on Tuesday the New Zealand Dollar to Pound Sterling (NZD/GBP) exchange rate has consequently been struggling to hold onto its recent gains.
Current GBP, AUD, NZD Exchange Rates
At the time of writing, the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate was slumped around 1.9484, while the Pound Sterling to New Zealand Dollar (GBP/NZD) pairing was trending lower at 2.1057. Meanwhile, the Australian Dollar to New Zealand Dollar (AUD/NZD) was making gains in the region of 1.0808.