IMF Downgrades Global Growth Forecasts : GBP AUD & GBP NZD Gains Predicted

October 7, 2015 - Written by John Cameron

STORY LINK IMF Downgrades Global Growth Forecasts : GBP AUD & GBP NZD Gains Predicted

London Stock Exchange Movement Impacts Foreign Currency Exchange Rates

The global markets saw a pronounced spike in global risk sentiment during the early part of this week’s trading session, as evidenced by the sharp move forward in London’s FTSE 100 share index on Monday. The leading UK exchange recorded a gain of almost 3.0% on the day as investors priced-in the fact that the ‘Chinese sell-off’ may have been overdone following last week’s better than expected manufacturing sector data from the world’s second largest economy.

Chinese Data Hits Shanghi Composite Index, Triggers FX Volatility in 2015

Recent movement in China’s premier stock exchange, the Shanghai SSE Composite index, has encouraged market participants that the bad news may not be almost completely out in the open. The SSE was trading at close top the 5,200 level as recently as the second week of June. The headline Chinese equities market slumped during the weeks which followed, closing in the 2,000s for the first time this year at the end of August.

Pound Sterling Falls from Best Rates against NZD, AUD Exchange Rates

The move, which came in response to softening Chinese data, prompted the nation’s policymakers to step into the markets and buy-up Chinese shares in massive quantities and the last 6 week shave seen the SSE hold at slightly above the 3,000 threshold. This period of sideways trading has seen global investors recover their collective nerve and the Pound Sterling (currency : GBP) has recorded significant losses against the high-yielding Australian Dollar (currency : AUD) and New Zealand Dollar : NZD) as a consequence.

IMF Predicts Losses for Australian Dollar, New Zealand Dollar Exchange Rates

However, a report from the International Monetary Fund (IMF), published yesterday afternoon, places the near-term gains for AUD and NZD firmly in the ‘at risk’ ward. As recently as July, the IMF has forecast a rate of global growth of 3.3% for 2015, rising to 3.8% in 2016. Yesterday’s missive saw the IMF slash its growth predictions to 3.1% for this year and 3.6% for 2016. Worryingly, the IMF report observed that, ‘a return to robust and synchronized global expansion remains elusive.’ Analysts forecast that the upshot could see the GBP AUD and GBP NZD exchange rates climb back up towards their recent multi-year highs.

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