Stronger Australian Home Sales Bolster Demand for Australian Dollar (AUD) Today
After a sharp increase in Australian New Homes Sales, which jumped from -2.7% to 6.0% on the month in December, the ‘Aussie’ (AUD) has returned to stronger form on Wednesday. As a result the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate has been on a downtrend at 2.0441.
Earlier…
Pound Sterling (GBP) has been making strong gains against the Australian Dollar (AUD) and New Zealand Dollar (NZD) on Tuesday after better-than-expected UK trade data.
Narrowed UK Visible Trade Balance Bolsters Pound Sterling (GBP) Exchange Rate Today
Although the bearish impact of the current ‘Brexit’ debate weighed on Pound Sterling (GBP) at the start of the week, the currency has regained some strength on the back of the latest UK Visible Trade Balance data. Bettering expectations, the UK’s trade deficit narrowed from -11.5 billion to -9.9 billion Pounds in December, a more positive sign for the domestic economy. Offering some support to Chancellor of the Exchequer George Osborne and defying the wider global slowdown trend, this stronger showing has helped to shore up the Pound against rivals today.
If tomorrow’s UK Industrial and Manufacturing Production also demonstrate an improvement at the end of 2015, Sterling is expected to advance further, though any new developments in negotiations on the UK’s future in the European Union could cut a resulting rally short.
Australian Dollar (AUD) on Downtrend Today as Risk Aversion Continues to Drag Markets Lower
Despite January’s NAB Business Confidence Index holding steady on the month, the Australian Dollar (AUD) has been trending lower across the board on Tuesday morning, with risk aversion sharply increased as a result of the Nikkei stock market plunging more than 5%. Volatility has remained heightened at the start of the week even in the absence of fresh prompting from China, a discouraging signal of the persistent bearishness of sentiment amongst traders. Commodity prices have likewise remained on a downtrend as the US Dollar (USD) continues to strengthen, pushing the ‘Aussie’ down as the mining industry comes under renewed pressure.
Later in the week the antipodean currency could soften further with comments from Fed Chair Janet Yellen set to provoke fresh movement. Should the Fed’s outlook on interest rate hikes prove more dovish than previously, however, the Australian Dollar may retake lost ground as the prospect of slower monetary tightening is likely to reassure global markets.
Stock Market Volatility Weighs on New Zealand Dollar to Pound Sterling (NZD/GBP) Exchange Rate
Confidence in the New Zealand Dollar (NZD) is equally weaker today, as the commodity-correlated currency is pulled down by stock turmoil. There has been little positive domestic data to distract investors from the worsening volatility of global markets today, leaving the South Pacific currency on a weaker footing as optimism widely declines. With dairy prices remaining in a slump since the start of the year the New Zealand Dollar continues to lack greater support.
Given the recent dovishness of the Reserve Bank of New Zealand (RBNZ), more hawkish commentary from the Fed is likely to erode the ‘Kiwi’ further as the odds of a consequent RBNZ interest rate cut increase.
Current GBP, AUD, NZD Exchange Rates
At the time of writing, the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate was making gains around 2.0520, while the Pound Sterling to New Zealand Dollar (GBP/NZD) pairing was on an uptrend at 2.1868.
Comments are closed.