‘Kiwi’ (NZD) Strengthening on Improved Dairy Outlook as Pound (GBP) Remains Soft on Dovish Bank of England (BoE) Comments
Following dovish comments from Ben Broadbent, one of the policymakers on the nine-person Monetary Policy Committee (MPC), the Pound (GBP) remained soft yesterday as traders had little motivation to return to the floundering currency. With Fonterra having raised its supplementary pay-out to farmers, meaning that members will now receive NZ$4.60 for every kilogram of milk solids produced, the outlook of the New Zealand’s major industry appears to be somewhat brighter. As a result the GBP/NZD exchange rate is trending bearishly around 2.4059, while the GBP/AUD pairing is also down in the range of 2.1678.
Earlier…
A weaker UK BBA Loans for House Purchase figure this morning kept the Pound (GBP) soft, neither the ‘Aussie’ (AUD) nor ‘Kiwi’ (NZD) are proving strong enough to advance however.
Sterling (GBP) Denied Substantial Rally as UK House Loans Increased at Lower Rate than Forecast Today
Following the disappointment of Tuesday’s UK Public Sector Net Borrowing figure, which increased far beyond expectations to clock in at 11.3 billion Pounds (GBP) instead of a more modest 8.8 billion, Sterling has remained in a general slump for much of the week. With the chances of a Bank of England (BoE) interest rate rise before at least the second quarter of next year appearing to have significantly dwindled there has been little domestic support for the ailing currency, as traders were more inclined to favour higher profiting rivals.
Hopes for a substantial uptick in Pound sentiment were somewhat dashed this morning as the August BBA Loans for House Purchase data showed a smaller gain than forecast. While an improvement in mortgage approvals was evident, this slower rate of increase was not met with great enthusiasm by investors as the figure was not of a strong enough calibre to encourage further talk of a near-future BoE rate hike.
Slowing Chinese Manufacturing Data Dragged Down ‘Aussie’ (AUD) on Wave of Risk Aversion, GBP/AUD Pairing Climbs
While the ‘Aussie’ (AUD) might have been supported by a positive showing on the Australian Conference Board Leading Index yesterday, the antipodean currency was rapidly weighed down by the release of the September Chinese Manufacturing PMI. Instead of evidencing a smaller contraction in output the figure instead printed at its lowest level since 2009, a bad sign of further slowdown in the world’s second largest economy. This latest blow to China’s major manufacturing industry prompted a dramatic rise in risk aversion, pushing the GBP/AUD exchange rate to a high of 2.1850 as the ‘Aussie’ entered a strong downtrend across the board.
With talk of a 2015 Fed interest rate hike still on the table, in spite of persistent global concerns, the antipodean currency remains bearish today. However, a substantial resurgence may be in store if the afternoon’s US Durable Goods Orders for August undercuts the argument for an imminent rise by showing a contraction in line with or worse than forecast.
‘Kiwi’ (NZD) Struggling to Rise Today after Widened New Zealand Deficit, Pound (GBP) Failing to Capitalise
Having also been negatively impacted by Wednesday’s fresh shortfall in Chinese data the ‘Kiwi’ (NZD) was generally weakened against many of the majors. Nevertheless, the persistently unenthusiastic market view towards the Pound prevented the GBP/NZD pairing from holding any of its gains for long yesterday.
The evening proved mixed for the South Pacific currency as the New Zealand Trade Balance for August showed a wider deficit than anticipated, increasing to -1,035 million New Zealand Dollars rather than -875 million. On the other hand, both Exports and Imports figures were a little less dovish as the nation’s level of exports and imports demonstrated a slower increase than investors had expected. Consequently the GBP/NZD conversion rate remained bearish, with a soft Sterling unable to particularly retake ground, largely due to another uptick in dairy prices lending further support to the ‘Kiwi’.
Current GBP, AUD, NZD Exchange Rates
At time of writing, the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate remains on a strong uptrend in the range of 2.1959, with the Australian Dollar to Pound Sterling (AUD/GBP) pairing continuing to shed value at 0.4552.
Meanwhile, the Pound Sterling to New Zealand Dollar (GBP/NZD) currency pair is trending narrowly around 2.4283, while the New Zealand Dollar to Pound Sterling (NZD/GBP) exchange rate is moving in the region of 0.4116.
Comments are closed.