The Pound (GBP) was holding onto gains against the weakened Australian (AUD) and New Zealand Dollars (NZD) on Monday, but it is forecast to come under sustained pressure as Thursdays Scottish Referendum vote draws closer.
Sterling received support on Monday after a report released by the Federation of Small Businesses (FSB) showed that confidence amongst the UK’s smaller companies remains highs with three-fifths of surveyed firms saying that they expect to expand over the coming year. All sectors reported they had a positive outlook for the seventh quarter in a row.
The Australian Dollar was weakened further against most of its major peers and declined to its lowest level in six months against the US Dollar after the latest motor vehicles sales report showed a decline. The official data showed that new motor vehicle sales in the Oceanic nation declined by 1.8% last month adding to the 1.3% decline seen in the preceding months.
The New Zealand Dollar meanwhile add to losses against the Pound and declined to a new seven month low against the US Dollar as low commodity prices and geopolitical events continued to weigh upon the currency over the weekend.
The announcement by the Australian government that it would be deploying troops to Iraq to help fight the barbaric Islamic State increased market jitters that the conflict could suck more nations into the fighting. The execution of a British aid worker has brought condemnation against IS and some economists are expecting the UK to announce that it will join US airstrikes over the coming weeks.
Both South Pacific currencies were also weighed upon by increased expectations that the US Federal Reserve is getting closer to hiking interest rates and ending its monthly quantitative easing programme. The Fed is forecast to cut its asset purchase program by another $10 billion at its upcoming policy meeting on Wednesday, which would keep it on track for winding up the program in October.
A report out of China, which showed that factory output and retail sales growth declined last month also put pressure upon the Australian and New Zealand currencies.
Pound Sterling to Australian Dollar and New Zealand Dollar exchange rate forecast
The Pound is forecast to remain higher against the weakening Australian currency until Thursday when Scotland takes to the polls to vote upon independence. A result in favour of independence could see Sterling tumble sharply with some economists saying that it could devalue by as much as 10%.
The Australian Central Bank is due to release the minutes of its latest policy meeting overnight and that could create volatility for the ‘Aussie’.
The ‘Kiwi’ could regain some ground overnight if the latest Westpac Consumer Confidence data comes in stronger than forecast.
Australian Dollar (AUD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Australian Dollar,
,US Dollar,0.8995 ,
Australian Dollar,,Pound Sterling,0.5533 ,
Australian Dollar,,Euro,0.6961 ,
Australian Dollar,,New Zealand Dollar,1.1063 ,
US Dollar,, Australian Dollar ,1.1116 ,
Pound Sterling,, Australian Dollar ,1.8070 ,
Euro,, Australian Dollar ,1.4362 ,
New Zealand Dollar,, Australian Dollar ,1.1064 ,
[/table]
