The Pound Sterling to US Dollar (GBP/USD), Pound Sterling to New Zealand Dollar (GBP/NZD) and Pound Sterling to Australian Dollar (GBP/AUD) exchange rates took a hit in Monday’s European session as the UK general election and weak CBI Trends Total Orders pressured the British currency significantly lower.
The Pound Sterling exchange rate declined rapidly when CBI Trends Total Orders sank in March from 10 to 0. Economists had forecast a softer drop to 9.
CBI director of economics Rain Newton-Smith stated: ‘Our manufacturers lost some of their steam from last month, but they continue to move steadily along a decent growth track. Sluggish export performance seems to be a headache that won’t go away, with a still subdued Eurozone and headwinds from a stronger Pound.’
However, Newton-Smith appeared to remain upbeat on the prospect of growth, saying: ‘But measures in the Budget to support exporters should be a welcome boost for the sector’s longer-term prospects. With emerging markets facing a tough time and uncertainty continuing to hand over the Eurozone, firms are having to work even harder for opportunities to sell their products and services around the world.’
New Zealand Dollar to Australian Dollar (NXD/AUD) Exchange Rate Hits Record Highs
Meanwhile, the New Zealand Dollar hit record highs against the Euro (NZD/EUR) and the Australian Dollar (NZD/AUD) on Monday. The New Zealand Dollar to Australian Dollar (NZD/AUD) exchange rate took an upswing as investors priced in the possibility of another Reserve Bank of Australia (RBA) rate cut.
After the US Federal Reserve’s dovish policy statement last week, riskier majors such as the ‘Kiwi’ and the ‘Aussie’ enjoyed some support.
Currency strategist Raiko Shareef commented: ‘In the end the New Zealand Dollar was the strongest performer against the US Dollar, which meant that we gained against the crosses as well. There’s speculation as to whether or not they’ll cut again in April and that will keep the ‘Aussie’ Dollar down.’
The US Federal Reserve is expected to be drawing closer to increasing borrowing costs and therefore the US Dollar exchange rate is extremely sensitive to any developments from the central bank.
The US Dollar could be in for movement later in Monday’s trading with the release of US Existing Home Sales stats. Additionally, Federal Reserve officials are also expected to speak which could impact the US Dollar to Pound Sterling (USD/GBP) exchange rate.
Pound Sterling Exchange Rate Forecast: GBP/USD, GBP/NZD, GBP/AUD
The Pound Sterling to US Dollar (GBP/USD), Pound sterling to Australian Dollar (GBP/AUD) and Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rates are likely to fluctuate on the release of UK inflation data on Tuesday. The Consumer Price Index (CPI) is expected to decline on the year in February and could be a development to pressure the Pound lower and stave off interest rate hikes by the Bank of England (BoE).
US CPI will also be out on Tuesday as well as New Zealand’s Trade Valance figures. The Australian Conference Board Leading Index will emerge late on Monday.
The Pound Sterling to US Dollar (GBP/USD) exchange rate is trading at 1.4895. The Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate is reaching 1.9557, while the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is trending in the region of 1.9074.
