Both the Australian Dollar (AUD) and New Zealand Dollar (NZD) exchange rates firmed against the Pound (GBP) on Wednesday due to positive domestic data releases but both are forecast to come under pressure from risk aversion as the fight against Islamic State escalates.
Sterling itself was coming under pressure from increasing expectations that the UK will be asked by the Iraqi government to join the US led coalition in bombing the Jihadists that have seized vast swathes of territory across Iraq and Syria.
Prime Minister David Cameron is recalling Parliament on Friday to debate the situation and MPs are expected to vote on the issue. As news of atrocities committed by IS continues to come out of Iraq and Syria it is likely that the UK will commit to the fight.
The Pound was also under some pressure from yesterdays disappointing public sector borrowing data and a report, which showed that new mortgage approvals softened.
A positive report released by the Conference Board sent the Australian Dollar higher against a number of peers and allowed it to ease away from a seven-month low against the US Dollar. The Conference Board’s Leading Index rose by 0.5% in July adding to the 0.2% gain seen in the preceding month.
Separately, the Reserve Bank of Australia said that it is currently discussing possible measures with other regulators to strengthen lending practices in an attempt to cool down the nation’s housing market.
‘The composition of housing and mortgage markets is becoming unbalanced, with new lending to investors being out of proportion to rental housings share of the housing stock,’ the RBA said in its semi-annual Financial Stability Review.
The New Zealand Dollar also managed to edge higher against the Pound after official data showed that the South Pacific nations trade deficit narrowed to NZ$472 million last month from the NZ$692 million recorded in July. The report also showed that the nation’s exports rose to NZ$3.52 billion last month, beating expectations for an increase to NZ$3.15 billion.
Against the US Dollar the ‘Kiwi’ slipped close to a one-year low after Fonterra cut its forecast payment to farmers for the current season as dairy prices continued to fall.
Pound to Australian and New Zealand Dollar Exchange Rate Forecast
Sterling is forecast to experience mixed trading against the Oceanic currencies due to a lack of market moving domestic data releases. Traders will watch Thursday’s RBA Governor Speech closely for signs of any change to the bank’s monetary policy.
The ‘Kiwi’ is likely to go back onto the retreat against the Pound following the Fonterra news; in fact, weakening commodity prices are likely to have a negative effect on both currencies.
UPDATE
On Thursday the Australian Dollar to Pound exchange rate fell by over 0.4% after Reserve Bank of Australia Governor Glenn Stevens spoke at the Melbourne economic forum. The RBA chief asserted that the central bank is considering cooling the housing market by introducing measures to restrict bank lending for home loans.
Meanwhile, the New Zealand Dollar to Pound exchange rate softened by more than 1.0% as a result of concerns that the Reserve Bank of New Zealand intends to intervene in the currency market in order to lower the value of the ‘Kiwi’.
Both the AUD/GBP and NZD/GBP pairings could experience movement following Bank of England Governor Mark Carney’s speech in Wales.
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,0.8882,
Australian Dollar,,Pound Sterling,0.5416,
Australian Dollar,,Euro,0.6907 ,
Australian Dollar,,New Zealand Dollar,1.0984 ,
US Dollar,, Australian Dollar ,1.1261 ,
Pound Sterling,, Australian Dollar ,1.8440 ,
Euro,, Australian Dollar ,1.4473 ,
New Zealand Dollar,, Australian Dollar ,0.9092 ,
[/table]
