GBP/AUD, GBP/NZD Exchange Rate – Sterling Gains against Both
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate began the European session in a slightly stronger position following some jawboning comments from the Reserve Bank of Australia’s Deputy Governor Chris Kent. Meanwhile, with economic data for New Zealand lacking, the GBP/NZD exchange rate eased lower as Sterling suffered from referendum pressure.
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While Kent did imply that the Australian economy is showing signs of improvement, and that business investment could support the nation, he added that the strength of the Australian Dollar is still hindering the nation’s progress.
He commented; ‘In nominal terms, non-mining business investment is at a very low level as a share of GDP, relative to its history [but] the gradual pick-up in the growth of non-mining economic activity over the past year augurs well for investment.’
The GBP/AUD exchange rate was little affected by the ANZ Roy Morgan Weekly Consumer Confidence Index, which drifted from 113.3 to 111.3.
The RBA meeting minutes were also published overnight and reiterated the central bank’s commitment to leaving interest rates on hold.
The Pound Sterling to Australian Dollar exchange rate achieved a high of 1.8022.
Pound Sterling to Australian Dollar losses were sustained during the European session after the UK’s Consumer Price Index showed the slowing in inflation forecast by economists.
As inflation fell to 1.5%, moving further below the Bank of England’s target level of 2.0%, the case in favour of an earlier-than-forecast interest rate increase was undermined and Sterling broadly softened.
According to economic advisor Martin Beck; ‘The drop in the price of oil, combined with a variety of other factors, suggests that the UK is set for a sustained period of very low inflation. Weak wage growth, plenty of slack in the economy, anchored inflation expectations and the continued effect of Sterling’s appreciation over the past year, all point to inflation remaining well below the MPC’s target for the remainder of 2014.’
Although the Australian Dollar was able to strengthen against the Pound, its relationship with the US Dollar was more tenuous as investors bet that the Federal Reserve will deliver a hawkish policy statement tomorrow.
The Pound to Australian Dollar (GBP/AUD) exchange rate is currently trading in the region of 1.7954 and the USD/AUD exchange rate is currently trading in the region of 1.1072.
While economic reports for New Zealand were lacking during the local session, the South Pacific currency continued trending lower against the US Dollar as a result of speculation surrounding the upcoming FOMC policy meeting.
The Pound to New Zealand Dollar exchange rate hit a high of 1.9892 on Tuesday before paring its advance as a result of slowing consumer price inflation in the UK.
Although Sterling did lose ground against the majority of its rivals after the inflation data was published, the GBP/NZD exchange rate went on to advance by over 0.2% as the European session continued.
The Pound to New Zealand Dollar (GBP/NZD) exchange rate is currently trading in the region of 1.9832 and the NZD/USD exchange rate is currently trading in the region of 0.8155.
GBP/AUD, GBP/NZD Exchange Rate Forecast
Both the Pound Sterling to Australian Dollar and Pound Sterling to New Zealand Dollar exchange rates are expected to experience movement following the publication of the UK’s Bank of England meeting minutes and employment figures.
Any negative surprises could cause the Pound to fall against its South Pacific rivals.
However, if UK wage growth climbs or if a divide is still shown to exist among the Monetary Policy Committee the Pound could come out on top.
Sterling advanced against the softened Australian and New Zealand Dollars on Wednesday as economists shifted their focus away from the impending Scottish referendum vote. The market’s attention is instead focused upon the release of the minutes of the Bank of England’s latest policy meeting minutes and UK unemployment data.
Sterling found support on expectations that the sessions data would show that unemployment fell yet again last month and would show a rise in earnings. Positive data would put pressure upon the Bank of England to raise interest rates. Most economists are also predicting that the No campaign will win Thursdays Scottish Referendum vote.