Sterling has struggled against the majority of its major peers, with the exception of the Euro, as the conclusion to the Scottish Referendum looms ever closer. The Pound’s antipodean cousins the ‘Aussie’ (AUD) and the Kiwi (NZD) have benefitted from the recent European Central Bank rate cuts and have generally trended high against their competitors.
The Pound Sterling to Australian Dollar exchange rate is currently trending in the region of 1.7395.
The Pound Sterling to New Zealand Dollar exchange rate is currently trending in the region of 1.9601.
Having remained unchanged in their monetary policy outlook; the Bank of England held the current interest rate of 0.50% for the 66th month on Thursday. With sentiment towards Sterling waning in the anxiety surrounding the Scottish bid for independence, the dovish BoE didn’t help curtail the downward trend.
Meanwhile the Australian Dollar got a healthy boost on Thursday following a combination of impressive data publications and the global growth prospects offered from the European Central Bank rate cuts.
Similarly the ‘Kiwi’ benefitted on Thursday from the dramatic ECB changes on Thursday. Despite having suffered from the recent global dairy price changes; the New Zealand Dollar strengthened on the back of the prospect of cheap trade with Europe. The New Zealand Dollar also benefitted from Australia’s run of form.
The Pound Sterling to Australian Dollar exchange rate has hit a low on Friday of 1.7350.
The Pound Sterling to New Zealand Dollar exchange rate has hit a low on Friday of 1.9561.
Friday has seen a continuation of the problems for Sterling with a less-than-satisfactory inflation estimate. The Bank of England published their estimation of inflation for the next 12 months which rose to 2.8% from 2.6%. Given that the BoE target inflation rate is at 2% it is not a good sign that it is moving in the opposite direction, and will become problematic if future labour market data fails to correlate.
In terms of Australian economic data the story has been very different to that of the UK. The AiG Performance of Construction Index rose from 52.5 to 55; moving away from the 50 mark which separates growth from contraction.
In the absence of any domestic data pertaining to New Zealand; ‘Kiwi’ movement has been mainly dictated by the strength of the ‘Aussie’ and the weakness of the Euro.
The Pound to Australian Dollar exchange rate has hit a high on Friday of 1.7475.
The Pound to New Zealand Dollar exchange rate has hit a high on Friday of 1.9581.
GBP, AUD and NZD Forecast for the Week Ahead
Sunday September 7th
Although they don’t hold an enormous influence in terms of wider market movement, Sunday’s New Zealand economic data publications will be of interest to those invested in ‘Kiwi’. The Mfg Activity Volume hit 0.5% previously and Manufacturing Activity hit 0.6% previously.
Monday 8th
The Australian ANZ Job Advertisements may not have a huge influence over market changes but will be of interest to those invested in the ‘Aussie’ as it is an effective tool for forecasting employment growth. The Australia Manpower Survey may also be noteworthy having hit 8% previously.
Domestic data pertaining to New Zealand will be varied in terms of economic weighting. The New Zealand Manpower Survey hit 26% previously. The more influential in terms of wider market movement will be the Monthly Card Spending Total which hit 2.6% in July.
The solitary British economic data publication, Lloyds Employment Confidence, will be fairly inconsequential and have no real bearing on Sterling changes.
Tuesday 9th
There will be several Australian data publications of varied importance on Tuesday. The data likely to spark market movement is the NAB Business Confidence, Home Loans and Investment Lending. The Roy Morgan Weekly Consumer Confidence Index, NAB Business Conditions and Value of Loans data will be of note to those backing the ‘Aussie’.
Of all of the UK data publications on Tuesday the Visible Trade Balance, Trade Balance Non EU, Total Trade Balance, Industrial Production and Manufacturing Production will have the most influence on Sterling movement. Perhaps most important, in terms of both its market moving potential and as an economic gauge, will be the NIESR Gross Domestic Product Estimate which currently stands at 0.6%.
Wednesday 10th
Wednesday will likely see the New Zealand Dollar stabilise ahead of the evenings crucial Reserve Bank of New Zealand Rate Decision. Whilst most agree that they will likely stick to the current rate of 3.5% traders will be reluctant to second-guess the policymakers after the ECB shock.
The Westpac Consumer Confidence Survey is likely to spark movement for the Australian Dollar.
Both the Australian Dollar and the New Zealand Dollar are likely to be affected by Wednesday’s Chinese economic data publications. New Yuan Loans holds the most market moving potential and is forecast to rise to 700 billion from 385.2 billion. Chinese Aggregate Financing may also have an influence over the ‘Aussie’ and the ‘Kiwi’.
Thursday 11th
The solitary British data publication on Thursday, the RICS House Price Balance, is unlikely to have any real market moving influence.
The Australian Employment Change will be of high significance both as an economic gauge and a potential market changer. Unemployment Rate will also figure highly in the ‘Aussie’ exchange rate, and Full Time Employment Change will contribute also.
The New Zealand Business Performance of Manufacturing Index is the most influential data publication for New Zealand on Thursday and is currently at 53.
Once again Chinese data will have a marked influence over the ‘Aussie’ and the ‘Kiwi’. The Producer Price Index is forecast to decline from -0.9% to -1.1%, and the Consumer Price Index is forecast to drop from 2.3% to 2.2%.
Friday 12th
Friday’s Australian economic data, Credit Card Balances and Credit Card Purchases, will be of little consequence but may be of interest to those invested in the ‘Aussie’.
Similarly the British construction data won’t have a huge significance over wider market movement.
