British Pound (GBP) to New Zealand Dollar (NZD), Rupee (INR) and Euro (EUR) Exchange Rate Forecast: FOMC Minutes Impact Market
US Dollar (USD) Exchange Rate Weaker after FOMC Minutes
On Wednesday higher risk assets, like the Australian and New Zealand Dollars, were briefly supported by the publication of surprisingly dovish minutes from the Federal Open Market Committee’s last gathering.
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The Fed still inferred that interest rates will be increased by the middle of this year, but implied for the first time that international economic developments could have an impact on the direction taken by borrowing costs.
This was taken as a sign that rate hikes will be pushed back if the global situation deteriorates and the US Dollar broadly declined.
However, the ‘Aussie’ and ‘Kiwi’ both shed initial gains as commodity prices fluctuated. The Pound also lost some ground against the Euro after achieving a fresh seven-year high yesterday.
British Pound (GBP) Exchange Rate Stronger after UK Employment Gain
As the European session continued the British Pound (GBP) advanced on almost all of its most traded currency counterparts in response to a better-than-expected set of employment figures for the UK.
While a jobs gain of 50,000 had been expected, the nation actually added 103,000 positions in the three months through December, taking the unemployment rate from 5.8% to 5.7%.
Average weekly earnings also increased by more than expected on the year, rising 2.1% following a positively revised figure of 1.8% in the three months through November.
Economist Rob Wood said of the report; ‘Improving nominal pay, along with falling petrol and food prices, should combine in a powerful cocktail that puts the fizz back in the UK recovery. We expect the BOE to hike rates faster than the markets expect, starting with a first hike in February next year.’
The British Pound to New Zealand Dollar (GBP/NZD), British Pound to Australian Dollar (GBP/AUD) and British Pound to Euro (GBP/EUR) exchange rates all advanced by more than 0.5% in the wake of the report’s publication.
The British Pound to Indian Rupee (GBP/INR) exchange rate extended its gain to 0.85%.
British Pound to New Zealand Dollar (GBP/NZD) Exchange Rate Forecast: Dairy Auction Boosts ‘Kiwi’
During the Australasian session the British Pound to New Zealand Dollar (GBP/NZD) exchange rate lost around a cent in response to a positive dairy auction. Drought concerns helped push dairy prices up around 10%. The UK’s beyond 25-year low inflation rate also contributed to the GBP/NZD pairing’s losses.
As dairy produce is New Zealand’s main export, this result should have pushed the New Zealand Dollar to US Dollar (NZD/USD) exchange rate higher, but gains were limited as investors adopted a cautious attitude amid the Greek bailout uncertainty.
The tense situations in Ukraine and Libya also took a toll on demand for higher-risk assets.
According to industry expert Peter Cavanaugh; ‘We are surprised [the New Zealand Dollar] is not higher. The world is not really looking at New Zealand at the moment and if they are, they are doing so with a wary eye on the world.’
In the hours ahead, the Pound could strengthen against the ‘Kiwi’ if the UK’s employment report impresses.
The British Pound to New Zealand Dollar (GBP/NZD) exchange rate is currently trading in the region of 2.0281.
British Pound to Indian Rupee (GBP/INR) Exchange Rate Forecast: Sterling Trends Higher
Ahead of the publication of the UK’s employment stats for the three months through December, the British Pound to Indian Rupee (GBP/INR) exchange rate was trending in a stronger position having gained by around 0.35%.
Although Sterling came under pressure on Tuesday after the UK’s Consumer Price Index saw inflation print at an over 25-year low, bets that the Reserve Bank of India (RBI) might issue a rate cut in order to combat negative Wholesale Prices weighed on the Rupee, as did a general risk-off environment.
With Indian data in short supply today, movement in the GBP/INR currency pair is likely to be the result of UK news and global economic developments. The Rupee was able to gain against the US Dollar thanks to increased ‘Greenback’ demand among domestic banks and exporters.
The British Pound to Indian Rupee (GBP/INR) exchange rate is currently trending in the region of 95.6450.
British Pound to Australian Dollar (GBP/AUD) Exchange Rate Forecast: ‘Aussie’ Holds Gains as RBA Rate Cut Bets Fall
The British Pound to Australian Dollar (GBP/AUD) exchange rate was trading in a narrow range at the beginning of the European session as investors looked ahead to the day’s big UK news – the nation’s employment figures and the publication of minutes from the Bank of England’s latest policy meeting.
The GBP/AUD pairing had previously softened following the publication of the Reserve Bank of Australia’s meeting minutes as they indicated that the South Pacific central bank is in no hurry to cut interest rates further.
During the local session Australian data printed fairly positively.
The Conference Board Leading Index increased by 0.4% month-on-month in December following November’s 0.1% gain.
The Westpac Leading Index climbed 0.1% in January following the previous month’s stagnation.
The British Pound to Australian Dollar (GBP/AUD) exchange rate was trading in the region of 1.9656
British Pound to Euro (GBP/EUR) Exchange Rate Forecast: Sterling Could Extend Declines if Greece Strikes a Deal
Speculation that Greece intends to reach an agreement with its creditors, which would see it have a six-month extension to its current bailout programme, saw the British Pound to Euro (GBP/EUR) exchange rate decline.
If such an accord is reached, it would significantly lessen the odds of Greece exiting the Eurozone and the Euro could bounce higher.
The common currency could also experience fluctuations later today following the release of the Eurozone’s Construction Output report.
The British Pound to Euro (GBP/EUR) exchange rate is currently trading in the region of 1.3520