The Pound has been trading in a tight range against the Australian Dollar (GBP/AUD) at the start of Wednesday’s European session but has made notable losses against the New Zealand Dollar (GBP/NZD), declining by around 0.40%.
New Zealand Dollar Exchange Rate Gains on Federal Reserve Monetary Policy Shift
Weaker US economic data this week, and comments from senior Fed officials have been enough to prepare the market for the prospect of a US rate cut in the near future. The US Dollar hit a seven-week low this week as markets price in rate cuts, possibly as soon as the next policy meeting in a few weeks.
Meanwhile, a Reserve Bank of New Zealand (RBNZ) official stated that they saw interest rates remaining at their current levels for the foreseeable future, after a recent cut to 1.50%, an all-time low. Assistant Governor Christian Hawkesby said:
‘Our central view is that New Zealand’s interest rates will remain broadly around current levels for the foreseeable future. However, we need to be ready to adapt to changing conditions, to meet our objectives even when confronted with unforeseen developments.’
Investors will be closely watching the next RBNZ Official cash rate meeting on June 26th.
Australian Growth Stumbles to 10-Year Low
Meanwhile, in Australia, the latest Gross Domestic Product (GDP) figure hit its slowest pace in 10 years in the first quarter. Growth came in at only 0.4% in Q1, below the forecast for 0.5% expansion, while the annual figure came in at 1.8%, down from the previous 2.3% reading.
CommSec Chief Economist Craig James said:
‘The Aussie economy has lost momentum. And soft consumer spending is the main culprit. Both monetary and fiscal stimulus are needed to reduce unemployment and revive inflation. But businesses also need to respond through increased investment.’
The Pound to Australian Dollar (GBP/AUD) exchange rate is trending in the region of 1.8165. The Pound to New Zealand Dollar (GBP/NZD) exchange rate is trading at 1.9150.
Update: As Wednesday’s European session came to a close, the Pound was still trading lower against the New Zealand Dollar (GBP/NZD) but had made some gains against the Australian Dollar (GBP/AUD). Tomorrow, Bank of England (BoE) Governor Mark Carney will speak in Tokyo, and Australian Trade Balance and construction sector data will be released which could influence markets.
The Pound has entered Thursday’s European session in a tight range against both the Australian (GBP/AUD) and New Zealand (GBP/NZD) Dollars. Meanwhile, the Aussie currency slipped against the US Dollar (AUD/USD) overnight, after better than forecast US data.