Pound Sterling vs Australian Dollar and New Zealand Dollar: The Outlook Starts to Swing Back Towards the AUD and NZD
Finally we get some weaker than expected data out of the UK economy and GBP has suffered as a result; a look at the global forex markets on Friday morning shows:
The Pound Sterling to Australian Dollar exchange rate is 0.47 pct lower at 1.7015.
The Pound Sterling to New Zealand Dollar exchange rate is 0.82 pct down on a day-to-day basis at 1.9615.
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As mentioned, we had some weak data out of the UK economy, and this has been looked at here.
September 7 election uncertainty fails to weigh on the Aud dollar
Australians will vote tomorrow on whether Prime Minister Kevin Rudd or opposition leader Tony Abbot is best to lead their economy through a slowdown.
Yet, it appears that uncertainty has yet to strain a recovery in the Aud dollar. However, the possibility of a hung parliament is a concern and may lead through to currency weakness if this is the case.
Sasha Nugent at Caxton FX points out that the next big test for a nascent AUD recovery comes today at 13:30 BST.
Nugent says, "today’s US employment data could also add to Aussie weakness and as a result, we believe 1.71 levels are probable."
Be warned: Aud Dollar weakness could resume
Sentiment against the Australian Dollar remains high however, and should further sings of a possible Australian interest rate cut grow then we could see further AUD weakness.
ANZ Research say that a November rate cut is possible:
"We have pushed out our call for an October cut and now expect the cash rate to be lowered by 25bp at the November RBA Board meeting.
"While we believe we are now very close to the low in rates, the upward trend in the unemployment rate is likely to prompt the Bank to cut the cash rate before year end.
"There are still significant headwinds, however, with the wind-back of mining investment, soft consumer and business caution, and the potential for further falls in the terms of trade all likely to weigh on the outlook.
"Monetary policy now looks to be almost at a setting which is stimulatory enough to balance these opposing influences, although the path of the AUD will remain a key input to policy deliberations in the near-term."
New Zealand Dollar: Can the pound push just a little further?
Turning to the New Zealand Dollar (Currency:AUD) we note that over the course of the past 48 hours the Pound Sterling managed to push the GBPNZD rate marginally higher.
"While the markets await the Reserve Bank of New Zealand’s interest rate announcement, US data will most probably be the driver in this pair today," says Nugent, "Due to the US influence and the dilemma facing the RBNZ, positive production data could provide a small window for the GBPNZD rate to trade at levels of 1.97."