GBP advances 0.44 pct against AUD as Investors Edge Towards Safe Havens
Don't court on an unopposed British Pound rally just yet.
This week's big event for the British Pound comes tomorrow when Bank of England Governor Mark Carney speaks in Nottingham.
Jeremy Cook at WorldFirst tells us why Wednesday will see heightened volatility in GBP:
"The main event for the pound this week will be a speech by Dr Carney at Nottingham University during which he is likely to further chastise the market about his ability to keep interest rates low until 2016.
"The market is currently looking for a rate rise in September 2014 and it’s this disconnect that’s keeping the pound artificially high at the moment.
"I believe that despite the 0.7% increase in GDP in Q2, the Governor will dictate that this does not constitute ‘escape velocity’ and that BOE monetary policy will remain a mix of ultra-low rates and additional QE. Carney speaks tomorrow at 13.45 BST."
Safe haven demand sees Aus Dollar lose out
The strength the Aussie gained last week after the release of Chinese PMI figures seems to have worn off.
The increasing likelihood of a reduction in Fed stimulus has stolen the show and the Aussie is now on the back foot once again.
Sasha Nugent, Analyst at Caxton FX says:
"The Chinese data effect has worn of leaving the Aussie vulnerable
"The GBPAUD rate has begun the week by aiming to regain losses incurred towards to end of last week, and with investors edging towards safe havens after emerging market concerns, the longer term trend is likely to continue."
New Zealand Dollar: Stable for now
Turning to the New Zealand Dollar (Currency:NZD) we see:
The Pound Sterling to New Zealand Dollar exchange rate is 0.43 pct down on a daily basis: 1 GBP converts to 1.9932 NZD.
The New Zealand Dollar to Pound Sterling Rate: 1 New Zealand Dollar converts to 0.5017 Pounds.
"The Kiwi has maintained its gains from last week through to the beginning of this week as Fonterra contamination scare is seen to be less worrying than previously thought," says Nugent.
The firm achieved record sales and revenue from the GlobalDairyTrade auction this month despite issues with its trading partner China.
Nugent goes on to say: "Although stability in the NZD is evident, Fed tapering as well as comments from the BoE governor Mark Carney are expected to put downward pressure on kiwi. Today we expect some sideways movement around the 1.98 level."
Kathy Lien at BK Asset Management says the NZ Dollar is preferred to the Australian Dollar on economic fundamentals:
"Compared to Australia, the outlook for New Zealand's economy is still brighter with some economists even calling for New Zealand to be the best performing G10 nation next year.
"While we feel that this call may be a bit bold, we agree that the NZD is poised for further gains especially against the AUD."