- UK Pound gains on consolidative trading
- Positive Chinese ecostats support high-yield demand
- South Pacific assets climb
- Pound Sterling forecast to hold losses against AUD, NZD
Pound Sterling (GBP) Exchange Rates Forecast to Strengthen on ‘Unjustified’ Losses
During yesterday’s session the British Pound softened in response to dovish minutes from the Bank of England’s (BoE) interest rate decision. The minutes showed that the Monetary Policy Committee (MPC) fear the impact of a ‘Brexit’ and are not likely to alter policy outlook until after the referendum vote.
Whilst this was certainly dovish, it wasn’t breaking news. Most analysts had expected the MPC to warn of the impact of ‘Brexit’ uncertainty. As such, traders had already priced-in expectations of a dovish reaction from the central bank, so the Pound’s extended losses have been considered unjustified.
As a result of consolidative trading the Pound advanced versus all but the Oceanic assets on Friday morning. This is despite weak domestic data which showed Construction Output unexpectedly contracted on the month in February, with annual growth missing the median market forecast.
The weak output data ‘provide more evidence that concerns about the EU referendum are sapping the recovery of its momentum,’ said Samuel Tombs, economist at Pantheon Macroeconomics. ‘The fiscal squeeze also is to blame for the sector’s troubles,’ he added, noting ‘public construction and infrastructure, which is 40% attributable to the public sector, both fell by 1.8%.’
Australian Dollar (AUD) Exchange Rate Forecast to Advance despite RBA Warning on Apartment Supply
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate edged lower by around -0.2% on Friday morning.
Although China’s first-quarter Gross Domestic Product met with the median market forecast 6.7%, economic output is still at its lowest since 2009. As a result, most analysts predict that China’s government will have no choice but to keep up stimulus measures. This was supportive of demand for riskier assets.
The Australian Dollar is holding losses versus its South Pacific counterpart, however, thanks to the Reserve Bank of Australia’s (RBA) Financial Stability Review. RBA policymakers fear that there is a disconnect between the growing supply of apartments on the East Coast and demand.
In residential development, the RBA identified a ‘mismatch between a growing supply of geographically concentrated apartments on the East Coast and softening demand for these apartments in some areas – given the rebalancing of housing demand and strengthening of lending standards.’
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is currently trending in the region of 1.8365.
New Zealand Dollar (NZD) Exchange Rates Forecast to Rally despite RBNZ ‘Leak’
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate declined by around -0.5% on Friday morning.
Similarly to that of its Oceanic neighbour, the New Zealand Dollar advanced versus its major peers in response to positive data out of China. Not only was the prospect of stimulus measures from China’s government supportive of ‘Kiwi’ (NZD) gains, but China’s retail sales and industrial production bettered the respective median market forecasts.
The ‘Kiwi’ advanced even amid concerns regarding the leaked decision to cut rates in March, but sentiment towards Governor Graeme Wheeler remains dampened.
‘Central banks can go through rough periods and then when you combine it with events like leaking a decision, it can look as if there’s a problem,’ said Shane Oliver of AMP Capital Investors Ltd. ‘It’s fair to say that Wheeler’s going through a rough patch at the moment.’
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate is currently trending in the region of 2.0513.
Pound Sterling to Australian Dollar, New Zealand Dollar Exchange Rates Forecast: US Confidence Report to Provoke Volatility
Given the absence of further data pertaining to the UK, Australia and New Zealand for the remainder of Friday’s trade, the GBP/AUD and GBP/NZD exchange rates are forecast to hold losses. However, there is the potential for volatility in response to North America’s University of Michigan Confidence report.
The US rig count may also provide market volatility given that a higher count would weigh on oil prices and therefore risk-appetite.
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate was trending within the range of 1.8309 to 1.8406.
The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate was trending within the range of 2.0459 to 2.0652 during Friday’s European session.
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