British pound (GBP) vs Aus and NZ dollars: AUD rally has further to run, NZD supported by interest hike predictions

The pound sterling (GBP) is 0.24 pct higher against the Australian dollar (AUD) in mid morning trade in London. GBP/AUD is quoted at 1.6206.

The pound sterling to New Zealand dollar (NZD) exchange rate is meanwhile 0.4 pct lower at 1.9458.

(Note: All quotes are from the wholesale markets; your bank will subtract a discretionary spread from when passing on their retail rate. However, an independent FX provider will guarantee to undercut your bank's offer, thus delivering up to 5% more currency. Please learn more here.

Concerns that Aus Reserve Bank boss will talk AUD lower

Follow today's live coverage for the drivers behind the GBP; remember the only key economic data release for today is due at 11 GMT.

Regarding the Aus dollar, we note currency markets remain concerned over what RBA Governor Stevens will say when he speaks tomorrow:

"RBA Governor Stevens has every incentive to lament the recent strength of the Australian dollar when he speaks on Tuesday, and to reiterate concern over how easily the economy as a whole will cope with the fading mining investment boom," says Gareth Berry at UBS.

However, Sean Lee at FXWW tells us that the Aus dollar remains well supported; he is biding his time before a drive higher in the AUD/USD pulls the other AUD pairs higher:

"The big levels to watch are very clear on the daily, with support at .9510/20 and resistance at .9715/40. Short term support levels start at hourly lows near .9570; Real-money bids were reported last week starting near 0.9550. Macro funds were on the offer .9675/80 end of last week. I still favour the buy-dip strategy here but patience required."

Bank of America Merrill Lynch also support the idea that the Australian dollar has further to climb:

"We recommended buying AUD/USD as a short-term opportunity with the delay in Fed tapering and fiscal risks likely to be supportive for carry trades. Our flows suggested that longer term investors were still relatively short AUD, adding to the near-term upward pressure on the currency.

"We recommended buying a 2m 0.9750 call against selling 2x 0.9900 calls. Despite the recent fall in the AUD - in our view, due to a combination of overbought technicals and crowded AUD/JPY longs - we expect the carry supportive environment to continue until mid-December and AUD/USD to approach the high 0.90s."

Meanwhile, currency markets continue to back the New Zealand dollar in anticipation of an interest rate hike which could come early next year.

"Our economists anticipate the first RBNZ hike in March 2014 (consistent with the RBNZ’s own forecasts), whereas they expect the RBA to remain on hold for all of 2014," says Berry.