IMF Global Growth Downgrade Sends Pound Sterling AUD NZD CAD ZAR Forecast Higher, BoE News Less Positive

April 13, 2016 - Written by Frank Davies

STORY LINK IMF Global Growth Downgrade Sends Pound Sterling AUD NZD CAD ZAR Forecast Higher, BoE News Less Positive

The Pound has slumped against its peers today, owing to the Bank of England (BoE) putting yet another freeze on the national interest rate.

GBP Gains on AUD, NZD, ZAR on IMF Growth Predictions

A gloomy report form the International Monetary Fund (IMF), published yesterday, has caused some leading analysts to up their forecast for the Pound Sterling (currency : GBP) against the Commodity Dollars.

The widely respected organisation slashed its growth forecast for the global economy to 3.2% for this year and down to 3.5% next year and described the current world economic situation as ‘increasingly disappointing.’ As recently as twelve months ago, the IMF was predicting a global growth rate of as high as 3.8% for this year, so today’s downgrade was a significant one.

US Interest Rates Forecast to Remain on Hold, US Dollar Falls

The IMF’s warned of, ‘the global impact of the unwinding of prior excesses in China's economy as it transitions to a more balanced growth path after a decade of strong credit and investment growth’. These words could prove to be prescient, given that the latest Chinese Gross Domestic Product data is due for publication during the early hours of Friday morning.

Chinese GDP Data Could Send Australian & New Zealand Dollars Higher

Economists expect that the latest Chinese growth numbers will point to a deceleration in the rate of expansion in the world’s second largest economy; such a result will heap further pressure on risk-correlated currencies including, but not limited to, the Australian Dollar (currency : AUD), the New Zealand Dollar (currency : NZD), the Canadian Dollar (currency : CAD) and the South African Rand (currency : ZAR).

Elsewhere, today’s data highlights come from North America; look for a strong showing from this afternoon’s US Advance Retail Sales figures at 1330hrs GMT to help propel the Pound US Dollar exchange rate back down towards the psychologically significant 1.4000 GBP USD threshold. The latest Bank of Canada (BoC) monetary policy decision follows shortly afterwards – any alteration to the BoC’s current headline interest rate of 0.5% is considered unlikely. However, the tone of the BoC’s accompanying commentary will be closely-monitored, especially in light of the IMF’s downbeat commentary yesterday.

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