The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate climbed in Wednesday’s European trading after the Reserve Bank of Australia (RBA) released its Financial Stability Review, while the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate remained in a tight range.
RBA Suggests Housing Market Overheating could Impact Broader Economy – AUD Softens
The Reserve Bank of Australia discussed a potential overheating in the housing market which could damage the overall economy quite substantially. Many economists have voiced their concerns over the situation after the central bank cut interest rates from 2.50% to 2.25%.
The RBA stated: ‘Ongoing strong speculative demand would tend to amplify the run up in housing prices and increase the risk that prices in at least some regions might fall significantly later on.’
The central bank also acknowledged the risk lower interest rates pose to the housing market, saying: ‘Potential triggers for a reassessment include actual and expected monetary policy actions as well as a range of geopolitical risks.’
New Zealand Trade Balance Ecostat Impacts ‘Kiwi’ Exchange Rate
Meanwhile, the New Zealand Dollar was offered little support when the New Zealand trade surplus fell dramatically below expectations in February. New Zealand’s Trade Balance hit 50M in February after January’s 33M; economists had forecast a much larger 350M.
The weaker-than-predicted trade surplus is expected to be a result of softer demand from the Trans Tasman’s largest trading partner, China. In addition, dairy prices fell by around 50% last year and have quite an influential effect on the ‘Kiwi’ as dairy produce is New Zealand’s largest export.
Statistics expert Jason Attewell commented: ‘Annual dairy export values are still coming down from the highest annual level, which was in mid-2014, but quantities exported have remained fairly stable. Annual values are now 16% lower than for the year ended August 2014 and are at similar levels to late 2013.’
Meanwhile, the Pound was offered some support against a host of other currency majors when the UK BBA Loans for House Purchase figure reached above forecasts to 37.3K in February, higher than January’s 36.4K.
Pound Sterling to Australian Dollar (GBP/AUD) and New Zealand Dollar (GBP/NZD) Exchange Rate Forecast
The Pound Sterling to Australian Dollar (GBP/AUD) and Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rates are likely to fluctuate as a result of UK domestic data, central bank speculation and global developments with a lack of Oceanic data out for release over the rest of the week.
In addition, any fluctuations in the price of iron ore or dairy could majorly influence the ‘Aussie’ and the ‘Kiwi’ as the largest exports out of the Tasman.
Thursday will see the release of UK Retail Sales and CBI Reported Sales while Friday will see the Nationwide House Price Index published. Furthermore, Bank of England (BoE) officials will also be speaking throughout the day which could influence the Pound Sterling to Australian Dollar (GBP/AUD) and Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rates.
The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate is trading at 1.8889; the Pound Sterling to New Zealand Dollar (GBP/NZD) exchange rate is trending in the region of 1.9420.
