Fresh Gains Predicted for British Pound GBP vs Australian Dollar AUD and New Zealand Dollar NZD Conversion Rates as Chinese Shares Plunge

July 27, 2015 - Written by James Fuller

STORY LINK Fresh Gains Predicted for British Pound GBP vs Australian Dollar AUD and New Zealand Dollar NZD Conversion Rates as Chinese Shares Plunge

0.7% UK GDP Could See GBP to AUD at Best Conversion Rate Today

If the UK's second quarter growth data confirms a faster rate of expansion in the three months through June compared with the 0.4% growth recorded in the first quarter, the Pound could gain on peers like the US Dollar, Euro and Australian Dollar over the course of trading. A figure of 0.7% or higher could drive the GBP/AUD currency pair to a new over six-year best.

Earlier...

Pound Sterling (GBP) Trending Close to Best Rates against Australian Dollar (GBP/AUD) & New Zealand Dollar (GBP/NZD)

Today’s session has proved to be a torrid one for the high-yielding Australian Dollar (currency:AUD) and the export-driven New Zealand Dollar (currency:NZD).

The Pound Sterling (currency:GBP) recorded strong intraday gains against both of these Antipodean currencies following last night’s massive losses for Chinese shares. The nation’s leading equities index, the Shanghai Composite, lost 8.5% on the session as last Friday’s disappointing private sector manufacturing survey began to weigh down sentiment. The news that the collective profit accrued by Chinese companies had dropped by 0.3% from a year ago triggered further jitters amongst investors. Bernard Aw, a strategist at spread betting firm IG, noted earlier that Friday’s disappointing manufacturing sector data, ‘added to worries that there could be further weakness in the Chinese economy, after the patch of recent economic data showed signs of stability.’

Chinese Growth Concerns Reduce Appeal of Commodity-Driven/Higher Risk Currencies - AUD, NZD Fluctuate against EUR, USD GBP

The New Zealand and Aussie Dollars tend to work as proxy currencies for the less easily tradable Chinese Yuan, so the increased level of concern regarding the state of China’s real economy weighed them both down in equal measure. The Pound Sterling Australian Dollar exchange rate climbed to as high as 2.1348 GBP AUD on the day as a consequence and the Pound Sterling New Zealand Dollar exchange rate jumped to an intraday peak of 2.3610. Leading research agency Capital Economics sent out a note earlier today suggesting that there could be further losses to come for China’s stock markets.

The missive stated that, ‘the lesson from China's last equity bubble is that, once sentiment has soured, policy interventions aimed at shoring up prices have only a short-lived effect.’

Foreign Exchange Market Forecast - Gains Expected for GBP to AUD, NZD Exchange Rates in 2015

The recent 30% correction in Chinese stocks prompted the nation’s economy to step in an effort to prop up investor sentiment. Widespread suspension of trading in listed companies caused authorities to intervene in the market in the bluntest possible way by forcing local brokerages to buy up stocks using funds provided by the People’s Bank of China. Initially the plan worked and Chinese equities markets recorded gains, but now that sentiment is on the wane again, the efficacy of such moves is likely to falter. For this reason, many analysts forecast further gains to come for the Pound Sterling against the Australian Dollar and New Zealand Dollar before the Summer is out.

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