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Exchange Rate Forecasts: Pound Sterling, Australian Dollar (AUD) and New Zealand Dollar (NZD)

December 2, 2014 - Written by John Cameron

Latest News for the Pound Sterling (currency:GBP) vs the Aus Dollar (currency:AUD) and the NZ Dollar (currency:NZD)



pound to aud dollar exchange rateRussia’s incursion into the Eastern part of Ukraine could have far-reaching consequences on the tentative global economic recovery, if official figures published by the Russian economic development ministry earlier today are anything to go by. The most recent official forecast was for a 1.2% expansion in economic growth in the former Soviet state during 2015. However, sanctions imposed by Western nations on Russia have caused these initial predictions to be severely downgraded – the Russian economic development ministry now predicts that the nation’s economy will contract by 0.8% next year.

Slump Forecast for Russia’s Economy



The future prospects for the Russian economy have been dealt a further blow during recent sessions as the price of a barrel of crude oil continued to fall through the floor.

The price of ‘Black Gold’ has tumbled by close to 40% since the summer as structural changes in the oil exploration and extraction industry continue to take a hold.

The rapid expansion of ‘fracking’ in North America has massively increased supplies, while a continued slowdown in the Chinese economy, once dubbed ‘the workshop of the world’ has caused demand to ebb.

The final nail in the coffin of the price of crude came at the end of last week when the 12-nation OPEC organisation announced that it will not be restricting supplies in order to artificially force up prices.

Oil Price Slump Hits Russia Hard



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The downward move to close to the $70 per barrel threshold for the price of a barrel of Brent Crude earlier today has hit Russia hard and the knock on effect may have a dual outcome. Firstly, it will reduce Russia’s income from the sale of its plentiful natural gas supplies, reducing demand for exports from the eurozone, the UK and the USA.

A secondary effect will see the global rate of inflation tumble, and this in turn is likely to prompt central banks including the Bank of Japan and the European Central Bank, to further extend their Quantitative Easing programmes in order to inflate their economies away from deflation.

Aus to NZ Dollar Exchange Rate Forecast to Gain



The main beneficiaries of this complex situation are likely to be the Commodity Dollars, with the Pound Sterling forecast to lose ground against the Australian Dollar (currency:AUD) and New Zealand Dollar (currency:NZD) if oil prices remain at rock bottom levels.
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