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GBP/AUD Exchange Rate Forecast to Edge Higher on Weale Comments, GBP/NZD Softens as US Dollar Declines

Pound Sterling Currency Forecast

The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate edged higher by around 0.39% on Wednesday afternoon. The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate declined by around -0.38%. 

After Bank of England (BoE) Policy Maker Martin Weale made hawkish comments regarding pressure on policymakers to increase the lending rate in the face of Britain’s improving labour market. The gains have stalled somewhat, however, after domestic data failed to meet with economists’ predictions.

The Australian Dollar, meanwhile, declined versus its major rivals after the International Monetary Fund (IMF) stated that the Reserve Bank of Australia (RBA) should be prepared to ease policy if the recovery stalls.

The New Zealand Dollar gained versus some of its competitors in response to a softer US Dollar and improved market sentiment amid optimism of a Greek deal. Relatively positive data out of China also supported demand for the ‘Kiwi’ (NZD).

Pound Sterling to Australian Dollar (GBP/AUD) Exchange Rate Forecast to Advance after IMF Warning

The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is currently trending in the region of 2.0359.

The British Pound rallied versus many of its peers in response to hawkish comments by BoE Policy Maker Martin Weale in an interview with the Financial Times. Weale suggested that the improving British labour market, with particular focus on accelerated wage growth, is adding pressure on the Monetary Policy Committee (MPC) to increase the cash rate. Weale was one of two policymakers who dissented from the decision to hold the rate during several meetings last year. ‘If you’d asked me last autumn how rapidly I thought wages might pick up, looking at the most recent numbers, the movement seems to have been a bit faster than that,’ he said.

The rally was short-lived, however, after domestic data produced less-than-ideal results. BBA Loans for House Purchase saw 42,530 mortgage applications in May, missing the median market forecast 43,350 approvals. Richard Woolhouse, chief economist at the BBA, stated; ‘The increase in mortgage approvals this month is consistent with the trend we’ve seen since the start of the year. The numbers show that the property market remains buoyant after the general election. Fierce competition between lenders means that there are some great mortgage deals available from the high street banks.’

The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate dropped to a low of 2.0287 today.

After the IMF stated that the RBA needs to prepare to cut rates if the Australian economic recovery stalls, the ‘Aussie’ (AUD) softened. ‘Over the medium term and without reform, growth is likely to converge to a slower potential rate, reflecting less capital accumulation and only modest productivity growth,’ the IMF said in its preliminary statement on Australia for its Article IV mission. ‘This lower potential would still mean income growth in line with other advanced countries, but significantly slower than Australians have been used to over the last two decades.’

Pound Sterling to Australian Dollar (GBP/AUD) Exchange Rate Forecast to Hold Gains Ahead of Australian Job Vacancies

Given the lack of domestic data to curb the trend, the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is likely to hold gains for the remainder of Wednesday’s European session. With that being said, US data may impact upon demand for the ‘Aussie’. Should US labour data print poorly and provoke a US Dollar slump, the Australian Dollar will rally versus its peers. Thursday’s Australasian session ought to see GBP/AUD volatility with Australian Job Vacancies data due for publication. UK CBI Reported Sales, due for publication during Thursday’s European session, has the potential to provoke volatility.

The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate climbed to a high of 2.0443 today.

Pound Sterling to New Zealand Dollar (GBP/NZD) Exchange Rate Forecast to Trend within a Limited Range on Weak ‘Buck’ (USD)

The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate is currently trending in the region of 2.2923.

In response to a softer US Dollar after US Durable Goods Orders slumped beyond expectations, the New Zealand Dollar advanced versus its major peers. Aiding the appreciation was improved market sentiment amid optimism that Greece will strike a deal with creditors today in order to unlock aid.

The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate has fallen to a low of 2.2895 today.

In addition to a weak US Dollar and improved market sentiment, the ‘Kiwi’ also advanced thanks to positive data out of the world’s second-largest economy. China’s Westpac –MNI Consumer Sentiment increased from 111.1 to 112.3 in June. May’s Conference Board Leading Economic Index also climbed, advancing from 322.5 to 326.2.

Pound Sterling to New Zealand Dollar (GBP/NZD) Exchange Rate Forecast to Hold Steady ahead of US Labour Market Data

Given the absence of domestic data to provoke changes, the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate is likely to hold steady for the remainder of Wednesday morning. Wednesday afternoon could see GBP/NZD volatility with US labour market data due for publication. Thursday’s Australasian session will see GBP/NZD changes with New Zealand trade data due for publication.

The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate advanced to a high of 2.3024.